Author: Nextelegent

 

Welcome to Waiting For Us Podcast Episode Number 3. Today I would like to continue talking what we discussed in the last episode that when you ask people about India’s lack of progress in comparison to the developed economies, people say that India is a young democracy and we need more time. As I said in the last episode that 70 years is a long time and we have fallen far behind than the rest of the world.

In this episode I want to discuss 2 points:

1. Why has India lagged behind in the last 70 years?
2. Why we cannot wait or continue the same way for another 70 years?

If you look around the world and see the success people from India has achieved in other countries across the world, it is just stunning. A few Indian entrepreneurs have created companies adding trillions of dollars in GDP of these countries. India’s blue-collar workers has transformed cities and countries across middle east. Indians are single-handedly one of the richest and most successful minorities around the world. Indians are hardworking, intelligent, ambitious and extremely talented in all spheres of life. But after 70 years of self-rule at home, we have continued to struggle with the same issues of poverty, healthcare, poor infrastructure and education to name a few we inherited 70 years ago.

So, it is surely not the people. It is the policies we have adopted and the policy makers we have elected, which has kept us behind. Let me try to explain as why we have lagged behind other countries in the last 70 years.

At the time of India’s independence, since India was ruled by capitalists for over 300 years and communism was not something, which Indian population could ever adopt, India’s leaders chose asocialistic system, which we borrowed from Britain and central planning from Soviet Union due to British and Soviet Union influence on Indian leaders. Over the next forty years, India only got worse as India’s policy makers did not understand the negative consequences of the system we adopted. There were no motivations or mechanisms in the government run organizations to excel in their roles and to compete with the outside world. Job guarantees and corruption became central to all of the government organizations and seeped at the lowest level of society. So, in the first forty years of self-rule, when the Germans, Japanese, Europeans and Americans advanced science, technology and industry, India continued to fall behind. Since, our policy makers personally benefitted from the system in enriching themselves, they did not care to implement any reform. To make the situation worse, poor literacy rate also exploded the population, making the whole system to come to a collapse by 1990.

In 1990, as India imported much more than it exported and ran out of foreign reserve currencies to import the day to day commodities like petrol for its people. So, in 1990, for India to be able to continue to buy the basic commodities from the outside world, India was forced to devalue the Rupee and open a few sectors of economy to private enterprise. Today most of the economic growth, jobs and wealth have come from those sectors of the economy in the last 30 years. Bu the rest of the Indian economy such as the Public Sector Undertakings, Banks and behemoth government enterprise have continued as they were prior to 1990.This is one of the key reasons, we have not made the same progress made by others in the last 70 years.

Now let’s discuss as why we cannot continue the same way over the next 70 years.

According to India’s 2019 budget, Indian government income from taxes and other sources was 27 trillion rupees and Indian government spent a total of 34 trillion rupees. India borrowed the difference of 7 trillion rupees from its citizens and from outside sources such as NRIs, IMF, World Bank and other countries.  As you can see that Indian government has been spending more money than it collects in taxes and today India has accumulateda debt of 94 trillion rupees. Now I am using trillions to make the numbers easy to understand. 1 trillion is equal to 1 lac crores.

Now what is most interesting that Indian government spent 25 trillion rupees in funding hundreds of its money losing Public Sector companies including Air India, BSNL, MTNL, Electricity Boards, Mining, Railways and Government Banks. India government borrowed 7 trillion rupees to fund its key social responsibilities such as Education, Healthcare, Infrastructure, environment and other social functions.  It is no wonder that all of those key functions including Education, Healthcare, Infrastructure including roads and transport, drinking water, power generation, sanitation and others are far behind than what India’s citizen require.Since India spends all of its tax revenues on the government sector companies, it is squeezed to borrow as little as possible to provide other services. So, its 20 million government sector employees and politicians enjoy a good life but rest of its 1.2 billion citizens live in filth with poor healthcare, unhealthy air, lack of drinking water, dilapidated infrastructure and poor education.

Let me try to explain the situation in simpler terms. Let’s say you have a salary of 25 thousand rupees per month. You spend 15 thousand in house rent and 10 thousand rupees in car payment. You borrow 7 thousand every month now to pay for food and house help and your kids’ education. Since you have to borrow the money for food, house help and kids’ education, it is most likely that you will not splurge on food, you will only get help for key house chores and you will most likely send your kids to government schools. As you try to manage this, you have reached a debt of 94 thousand rupees.

The only way you can fix the personal situation is to downgrade your house and car or find a job which pays more. If you don’t do any of those things, you may go along for a while until your 94 thousand debt grows to a point where you will not be able to borrow any more. Because once you get to the point where you cannot borrow anymore and your expenses stay the same, it will be extremely painful.

India is in a similar situation today. The only way out of it is for the government to get out of funding its highly inefficient and money losing public sector companies, unprofitable railways and money losing banks and let the private sector make it operate it efficiently and profitably. And use the money it collects in taxes on the key functions India’s citizens need. There is no need for the government to continue to fund Air India when there is already a competitive aviation marketplace. It is one of the worst uses of taxpayer’s money when 95% of India’s population will never sit in an airplane in their lifetime. There is no need for the government to continue funding MTNL and BSNL, when there is already a competitive marketplace for telecommunications services. There is no need for the government to continue funding money losing banks when there are multiple large banks including ICCI and HDFC available for everyone to use for banking services.

If India’s debt continues to grow and the economy does not grow, India will not be able to buy the commodities and other things – such as petrol, medicines and other basic necessities which can only be purchased in USD or a non-rupee currency without devaluing the rupee again. Devaluation of the currency makes everything else produced in India more expensive overnight without any increase in individual’s income.Additionally, everyoneloses the value of their assets overnight as well.

Same thing happened in 1990. 100% of India’s economy was controlled by the government and once it ran out of foreign reserves, India was forced to devalue the rupee and forced to open a few sectors to private enterprise. Today, India has changed significantly. India has added another 500 million to its populationand climate change is adding an urgency to the management of India’s natural resources. A repeat of 1990 will be 100 times more painful.

Today, over 2 million people turn18 every month and are entering the job market. Asharp slowdown or disruption in economy will create disastrous outcomes. Climate change has already made droughts more severe and floods more deadly. Another few degrees rise in temperatures over the next 70 years will make parts of India inhabitable.

We must reverse the course by investing in functions, where government is really needed such as education, healthcare, infrastructure, law and order, defense, environment, natural resources such as water and land and add technology to make the governance transparent.

Today, there is tremendous need for investment in India’s judiciary. It takes generations to get a decision on a simple property dispute. All courts and government offices across the country lack funds for upgrades. Lack of computerizations across all businesses allows most businesses to avoid paying taxes and government banks to offer loans with no accountability to millions of politically connected individuals.  Lack of transparency in India’s law and order hides the true crime rate in India. Anecdotes of robberies and other crime fills the local city newspapers. Lack of investment in education is producing millions of unemployable graduates. Do we really think, we can continue the same for the next 70 years?

If the transition of government investment is not made from the ever money losing banks, public sector companies and railways to education, healthcare, natural resources, judiciary, law and order, defense and social services for the poor, India will not make it to the next 70 years. We will be then governed by someone else. I do not have a crystal ball but it is not an unimaginable to see that better managed or resource rich states may want to leave the Union or are lured by other countries to affiliate with them. That is what exactly happened 400 hundred years ago when a British East India company showed up at our doors and signed business and military alliances with a few princely states and slowly moved in to take over. It is urgent that we act to change the course before it is too late.

If you agree that we can solve these problems by two basic principles – 1. Limit government roles to key functions and government should only act as a referee and 2. allow private enterprise to provide solutions to day-to-day problems in India then please visit www.waitingforus.in and send a message as how you can help. Thank you.

That can only happen if the all the money losing sectors are allowed to be run competitively wi

More India delays such a transition, impact will be harder across the board.

We have been there before. In 1990, India got to a point, where the sellers forced India to put gold as collateral and devalued the rupee. Every time rupee is devalued, the value of everyone’s wealth is reduced proportionally and

But in the end, we the people of India are responsible for our achievements and failures alike.

PSU Loss Rs 31,000 crore

Railways Rs 35,000 CroreDebt 58,283 crore
14 Public banks Rs 74,277.77 crore 

1.5 lac crores loss between PSU, Railways and Government Run Banks and (0.6+0.7+lac Crores in Debt

Total Tax collection is 25 lac crores

Fiscal Deficit of 7 lac crores

7 trillion Rupees deficit

25 trillion collection

1.5 trillion annual loss between railways Banks and PSUs

200 trillion rupees economy

94 trillion in debt

Imagine the progress if India would have invested all this money in these key government functions and allowed private sector to run all of the businesses as it is done by the private sector in telecommunications, aviation, banking and other sectors privatized in the 1990s.

 

Hello again. Welcome to Waiting For you Podcast Episode #2. Over the next few podcasts, I will expand on the three things we discussed in the last podcast.

1.     people say we are a young democracy and we need more time. See how far we have come in 70 years. It is a tremendous fallacy.

2.     it is the population, which is keeping India backward. That is surely not correct as a number of other countries with high population density have achieved prosperity for a vast majority of their citizens.

3.     Finally, I will discuss as to how India can solve day-to-day problems faced by most of the people and bring exponential wealth to millions of its citizens by following the two basic principles 1) limit the role of the government to key functions and act as a referee and 2) transition day to day business to the private enterprise.

Today I want to expand on the first point i.e. when people say we are a young democracy and we need more time. See how far we have come in 70 years. It is a tremendous fallacy. Today, when you ask educated people in India, why things are not good for the majority of India’s population, you mostly hear, what do you mean – things are very good. We are a young democracy. We need more time and you should see how far we have come in the last 70 years. Most people now have refrigerators in their houses and middle-class families have cars.

India has a 300 million large middle class. Out of the 300 million, the top 100 million people can afford luxuries common in developed countries such as one or more cars, modern household amenities and money for eating out, going to movies, and take a family vacation. The remaining 200 million middle-class families live paycheck to paycheck trying to give their children a better life.

There is hardly any consideration for the bottom 1.2 billion people in India, who are living in extremely harsh conditions. As per the Indian government data, in 2020, India’s average monthly income is rupees 11254. Since top 10% earners control 77% of the wealth, the bottom 90% of the people live on less than 10,000 rupees per month. Let me repeat, the bottom 90% of the people live on less than 10,000 rupees per month. I am not sure if it is okay after 70 years of democracy in India.

Let’s start with seven very basic necessities, which are needed for an average citizen in their day-to-day lives: air, water, electricity, transportation, sanitation, healthcare, and education.

Let’s start with very basic human needs, Air. Over the last seventy years, we have polluted this very basic natural resource. Today, 40% of children below 12 years of age, and millions of adults in India suffer from asthma. It is not okay. India’s cities air is 100 times more polluted than what is okay for healthy human life. India’s government rather being the caretaker of its people to solve the problem, is complicit in polluting India’s air across the country by being the power generator, industry owner, and completing neglecting its role as the enforcer of air quality. I hope you agree that it is not okay that after 70 years we are considerably worse off from where we started.

Let’s discuss water. It is not okay that almost all of India’s 1.4 billion people do not have access to clean running water. India’s rivers run dry in the summer. Even the rich can’t get the running water in their homes. In the last 20 years, it has become a norm for major city populations to get water by a tanker service. Massive unplanned urbanization and massive pollution have reduced glaciers and dried up rivers. At the same time, the lack of management of underground water has brought havoc to significant parts of the country. Today India uses more underground water than the United States and China combined. At the same time, we have systematically paved over village reservoirs and almost have no policy to store water during monsoons. Lack of water is forcing thousands of farmers to commit suicide every year in India without any outrage. At the same time, water pollution is causing massive seasonal diseases such as dengue killing hundreds of thousands of people across India every year. So, I do not think it is okay that after 70 years of democracy, we cannot provide clean running water to all of India’s citizens.

Let’s discuss the next basic utility – electricity. It is not okay for India’s 1.2 billion people to live without or extremely limited access to electricity in 45-degree Celsius heat. In the last seventy years, India has become dryer and warmer year over year. Even though India has made investments in generating the electricity needed to live in India’s extremely harsh weather, we are still far behind in electricity production in comparison to most developed countries. Just for comparison, in 2019, China produced 7.5 Terawatt hours, United States product 4.5 Terawatt hours and India produced 1.6 Terawatt hours. In most developed countries, electricity is a basic utility. Power outage for over five minutes makes the local news. It is a twentieth-century problem solved by a large number of countries around the world. I think people in India deserve better and it is not okay to live in such harsh weather without just the basic comfort of a fan or a light bulb.

Let’s talk about the next basic necessity – Transport. It is not okay that 1.2 billion people have to travel inhumanely in government-run railways and road transport. Most of the 1.2 billion people in India travel in railways “general compartment” and government-run buses. The word “overcrowding” does not do justice to the ratio of available seats and people traveling on those buses and trains. Even the rich can’t escape the traffic. A 50-kilometer trip in any major city can take hours. It is again a twentieth-century problem solved by most large cities.  New York, London, Tokyo, and Seoul to name a few have cities that have a population of 10 million people.  None of these cities are gridlocked with traffic like all major cities in India and you don’t see overcrowding in buses, trains or metro as in India today. It is not okay.

Another basic necessity is sanitation. It is not okay for the whole country to live in trash up to our eyes. Not only it is bad for industries like tourism, it is a health hazard and directly responsible for disease and death for millions of people every year. India’s culture demands sanitation and most people go out of their way to keep their houses clean.  It is India’s neighborhoods, villages, towns, and cities, which are piled with trash because of a lack of recycling and garbage disposal policy at every level. Most of the developed world has put standards and processes in place to keep their cities clean for over 50 years ago. Its time, India’s citizens demand not to live in squalor. It is not okay.

Next, let’s discuss education. It is not okay that millions of Indian children from the poorest families as well as middle-class families cannot get a good education. If you look around the world from the United States to China, before they could create jobs for their populations, they first heavily invested in the education of their children. India’s public schools lack the infrastructure, trained teachers, and updated curriculums to compete with their counterparts around the world. It is not okay that after seventy years we cannot provide quality education to our kids.

Lastly, lets’ talk about healthcare. It’s not okay that most of 1.2 billion people get substandard healthcare in government-run hospitals. These government-run hospitals still look like nineteenth-century dispensaries with a lack of supplies and rampant corruption. Modern hospitals are out of financial reach for most people. I do not have statistics on the performance of the government-run hospitals but anecdotally, if you are admitted to a government-run hospital, it is almost fatal. Healthcare is a major issue in India and after 70 years, the healthcare provided to 1.2 billion people in India is not okay.

In the 1980s, “middle class” family income was under INR 1,000 a month. A typical “middle class” family life was rather harsh. Government schools were overcrowded and lacked basic amenities. Power cuts across the year were a norm. Local public transport was non-existent and the intra-city transport was as miserable as it is for the 1.2 billion people living in India today. Since then the average income for the same family has gone up by 50 times but the cost of living has gone up over 100 times. So, in reality over the last 30 years, if you look at the numbers, for the bottom 1.3 billion people things have gotten worse.

India has progressed for the top 100 million people. Rest 1.3 billion people are either stagnant or worse off. Even for the top 100 million people, this is not sustainable. Is it okay for them to live with the poor quality of air, lack of running water, travel on traffic-congested roads, live in filth once they come out of their homes, and can be a target of ever-increasing random crime in India?

So, everything is not okay. Seventy years is a long time. At the same time, Japanese, Germans, South Koreans, Taiwanese, Singaporeans, Europeans, and Americans have made tremendous gains. We can get there if we first agree that we have fallen far behind and we deserve better.

If you agree that we can solve these problems with two basic principles – 1. Limit government roles to key functions and government should only act as a referee and 2. allow private enterprise to provide solutions to day-to-day problems in India then please visit www.waitingforus.in and send a message as to how you can help. Thank you.