Plan for reducing our budget deficit

With the new budget being announced, we see a well identified challenge of sustaining GDP growth of 9% (my gut feel is 7-8%). There are multiple areas announced in the budget that lay the foundation of to sustaining the GDP growth rate – infrastructure, power, agriculture and urban development. This benefit to the common man comes at a cost – higher fiscal deficit – approx INR 400,000 crores.

Here are three ways of bringing down the deficit if not completely neutralizing it:
1. Tax ‘productivity-hurdles’ for the nation (target INR 500 crores +)
a. For every political party / organization that organizes a bundh which affects productivity of a state, city or country with or without violence does it at a cost – INR 15 crores + cost of property destroyed
b. Labour groups calling for bandh at a production facility or service outlet – INR 5 crore + cost of loss of revenue
c. For over shooting of project deadlines, the contractors / vendors should be charged a part of their fee – it always happens in the private business world

2. Tax corruption (target INR 100,000 Crores +)
a. People taking bribes pay 10 times the bribed amount presuming that they have done this at least 10 times earlier and need to cough it up
b. Misuse of national property or funds – example Mayavati’s statues campaign – charge 5 times the amount spent from public money or a la Deve Gauda taking multiple trips in a month to Bangalore when he was the PM.
c. Non-payment of government dues – charge unsecured personal loan rates of interest (18-22% PA) for offenders beyond a crore of rupees, e.g., Reliance Industries not paying electricity bills to the board
d. Vote bank corruption should be charged at cost + INR 10 crores from the party resorting to such politics, e.g., 90:10 education policy of Maharashtra govt.
e. Infrastructure project revaluation midway, after lowest bid wins – the contractor pays for the increased value (surprisingly this has become a norm today)

3. Private participation in spends (INR 200,000 crores +)
a. This is at a conceptual level. Private companies earn revenues from the society pay taxes to the government. They expect rules to be changed to suit their company or industry. What about doing their bit for infrastructure, healthcare, well being of the society? I am not talking of lipstick-on-a-pig CSR initiatives. I think we have a role model in the form of Tatas as a group. Can each large corporate of over INR 100 crores of PAT contribute 10% of their profits (post tax) for a better India? Remember this 100 crores of Profit is gained from your country – India, a key stakeholder in your company

This sounds achievable and real. I am sure it will take a lot of beating from the corporate world, the babus, and politicians. But what the heck? If this is what the country needs, we got to do it.

Is India listening? Here’s over INR 300,000 crores recovered from the deficit!