WHY CORRUPTION AND BLACK MONEY ARE NOT MAJOR PROBLEMS MR. KEJRIWAL? (By S Ramamoorthy)
Mr.Kejriwal wants us to believe that only corruption is blocking our way to become Super Power Nation.....Eradicating Corruption is the only solution for the all problems currently being faced by India.
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Lets see in this article why Corruption and Black money in fact are not big deal?
WHAT DRIVES CORRUPTION?
In 2013 India has ranked 94th out of 176 countries in Transparency International's Corruption Perceptions Index....But if we analyse the Top 20 ranked & Bottom 20 ranked nations in that list, it becomes clear that countries which have strong "Democracy" and follow "Free Market Capitalism" economic Model enjoy less corruption and vice versa.
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But Why India is at 94th place even though we boast ourselves as world's largest democracy.
Reason is the absence of " Free Market Capitalism".
HOW FREE MARKET CAPITALISM CAN HELP TO CONTROL THE CORRUPTION?
As told by modi, duty of any government should be Minimum Government & Maximum Governance and It is not the business of Government to be in Business. Problem with India is Maximum Government and Minimum Governance..
Why USA is being called as Super Power Nation? Because its GDP is $ 17 Trillion with 32 Crores population ( Per Capita income is around $53000 ) where as India's GDP is just $ 2 Trillion with 1.2 Billion population ( Per Capita income is around $1500 ).12 millions people are entering Indian Labor Market every year for Job. Economy has to grow at least at the rate of 8 - 9 % annually to accommodate them and just to keep unemployment rate at the same level.
If India wants to become super power nation ( to overtake USA's GDP) by 2050 and to generate employment for its youth, it has to grow continuously in the double digit for next 4 decades.
Only one well proven economic model which can help us to grow at double digit is "Free Market Capitalism".
According to " Free Market Capitalism", market force will determine "Supply & Demand " in the economy and will fix price. Government role in the "Free Market Capitalism" is just to ensure the conducing business climate by removing Red Tapes, Bureaucratic Delays and to maintain Lower & Easy Tax Regime , Transparent Policies & Vibrant Judiciary to resolve contractual disputes in short time.Government should not run any business (such as Air India, Coal India, Indian Railways.etc..) since it cant run it efficiently and compete with private players and it should privatize every thing.
But irony is that India has ranked 134 out of 189 in "Ease of Doing Business Index" due to the Red Tapes, Complicated Tax Regime, Bureaucratic Delays, Impractical Laws.
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Only way left for Entrepreneurs to come out of this mess and to do business is corruption...
...So this is the system which has to be overhauled completely if we want to remove the corruption....Lokpal is not the solution and in fact it will further worsen the Business Climate since Government Officials will be wary of taking necessary decision fearing backlash..
IN CURRENT SCENARIO, CORRUPTION IS IN FACT GOOD SINCE IT AT LEAST SPEED UP THE APPROVAL IN THE ABSENCE OF STRUCTURAL REFORM.
HOW INDIA IS LOSING RS 4.8 LAKHS CRORES EVERY YEAR BECAUSE OF CORRUPTION AWARENESS:
Corruption is the catchy word for politicians like Kejriwal since it reaches people very well. But what people dont understand easily is the terms like "GDP Growth" and "Tax to GDP Growth".....
Till 2008, India enjoyed 9 % GDP growth rate. During UPA II, it started to gradually fall and registered 4.8 % growth in Financial Year 2013- 2014 mainly due to delay in Environmental Clearances, Land Acquisition and pending approval from Government Agencies . What does it mean?
1 % of Indian GDP is equal to Rs 1.2 Lakhs Crores ( India's total GDP is Rs 1.2 Crores Crores or $2 Trillion USD)......India's Current GDP growth rate is around 5 % which is very less from 9 % it enjoyed in 2008. It means that India is losing Rs 4.8 Lakhs Cores money every year....India's Tax to GDP ratio ( income earned by government of India) is 10 % which means that Government of India is losing Rs 48000 Crores income every year because of less growth.
In contrast, loss projected in 2G scam is just Rs 1.76 Lakh Crores which made Head Lines. But Indian Economy is losing Rs 4.8 Lakhs Crores every year and Government of India is losing Rs 48000 Crores revenue every year due to slump in GDP growth which nobody seems to care.
As informed earlier, if India fails to grow at the rate of at least 8 - 9 %, it cant accommodate 12 million people joining labor force every year. This surge in unemployment is dangerous and will result in social unrest.
This author has argued in one post titled " What India Should Learn from the Eurpoean's Secession Movement" that it is duty of government to ensure that its citizens are always running after money ( to consume more ) for the sake of unity of India.
Conclusion:
Only way to remove corruption is to overhaul the entire system which causes corruption. In the absence of any structural reform ( which will take several years and requires political will), corruption is in fact good since it will at least speed up the approval process resulting in GDP growth.
ENACTING LOKPAL WITHOUT STRUCTURAL REFORMS IS BAD FOR ECONOMY AND WILL FURTHER CAUSE CHAOS SINCE GOVERNMENT OFFICIALS WILL BE WARY OF TAKING DECISION FEARING BACKLASH.
lets see the following in Part 2 of this article:
1, WHY BRINGING BLACK MONEY TO INDIA WILL STROKE INFLATION AND NOT GOOD FOR ECONOMY?
2 . WILL BRINGING BLACK MONEY TO INDIA KILL INDIA'S EXPORT SECTOR INCLUDING IT?
Mr.Kejriwal wants us to believe that only corruption is blocking our way to become Super Power Nation.....Eradicating Corruption is the only solution for the all problems currently being faced by India.
Lets see in this article why Corruption and Black money in fact are not big deal?
WHAT DRIVES CORRUPTION?
In 2013 India has ranked 94th out of 176 countries in Transparency International's Corruption Perceptions Index....But if we analyse the Top 20 ranked & Bottom 20 ranked nations in that list, it becomes clear that countries which have strong "Democracy" and follow "Free Market Capitalism" economic Model enjoy less corruption and vice versa.
But Why India is at 94th place even though we boast ourselves as world's largest democracy.
Reason is the absence of " Free Market Capitalism".
HOW FREE MARKET CAPITALISM CAN HELP TO CONTROL THE CORRUPTION?
As told by modi, duty of any government should be Minimum Government & Maximum Governance and It is not the business of Government to be in Business. Problem with India is Maximum Government and Minimum Governance..
Why USA is being called as Super Power Nation? Because its GDP is $ 17 Trillion with 32 Crores population ( Per Capita income is around $53000 ) where as India's GDP is just $ 2 Trillion with 1.2 Billion population ( Per Capita income is around $1500 ).12 millions people are entering Indian Labor Market every year for Job. Economy has to grow at least at the rate of 8 - 9 % annually to accommodate them and just to keep unemployment rate at the same level.
If India wants to become super power nation ( to overtake USA's GDP) by 2050 and to generate employment for its youth, it has to grow continuously in the double digit for next 4 decades.
Only one well proven economic model which can help us to grow at double digit is "Free Market Capitalism".
According to " Free Market Capitalism", market force will determine "Supply & Demand " in the economy and will fix price. Government role in the "Free Market Capitalism" is just to ensure the conducing business climate by removing Red Tapes, Bureaucratic Delays and to maintain Lower & Easy Tax Regime , Transparent Policies & Vibrant Judiciary to resolve contractual disputes in short time.Government should not run any business (such as Air India, Coal India, Indian Railways.etc..) since it cant run it efficiently and compete with private players and it should privatize every thing.
But irony is that India has ranked 134 out of 189 in "Ease of Doing Business Index" due to the Red Tapes, Complicated Tax Regime, Bureaucratic Delays, Impractical Laws.
Only way left for Entrepreneurs to come out of this mess and to do business is corruption...
...So this is the system which has to be overhauled completely if we want to remove the corruption....Lokpal is not the solution and in fact it will further worsen the Business Climate since Government Officials will be wary of taking necessary decision fearing backlash..
IN CURRENT SCENARIO, CORRUPTION IS IN FACT GOOD SINCE IT AT LEAST SPEED UP THE APPROVAL IN THE ABSENCE OF STRUCTURAL REFORM.
HOW INDIA IS LOSING RS 4.8 LAKHS CRORES EVERY YEAR BECAUSE OF CORRUPTION AWARENESS:
Corruption is the catchy word for politicians like Kejriwal since it reaches people very well. But what people dont understand easily is the terms like "GDP Growth" and "Tax to GDP Growth".....
Till 2008, India enjoyed 9 % GDP growth rate. During UPA II, it started to gradually fall and registered 4.8 % growth in Financial Year 2013- 2014 mainly due to delay in Environmental Clearances, Land Acquisition and pending approval from Government Agencies . What does it mean?
1 % of Indian GDP is equal to Rs 1.2 Lakhs Crores ( India's total GDP is Rs 1.2 Crores Crores or $2 Trillion USD)......India's Current GDP growth rate is around 5 % which is very less from 9 % it enjoyed in 2008. It means that India is losing Rs 4.8 Lakhs Cores money every year....India's Tax to GDP ratio ( income earned by government of India) is 10 % which means that Government of India is losing Rs 48000 Crores income every year because of less growth.
In contrast, loss projected in 2G scam is just Rs 1.76 Lakh Crores which made Head Lines. But Indian Economy is losing Rs 4.8 Lakhs Crores every year and Government of India is losing Rs 48000 Crores revenue every year due to slump in GDP growth which nobody seems to care.
As informed earlier, if India fails to grow at the rate of at least 8 - 9 %, it cant accommodate 12 million people joining labor force every year. This surge in unemployment is dangerous and will result in social unrest.
This author has argued in one post titled " What India Should Learn from the Eurpoean's Secession Movement" that it is duty of government to ensure that its citizens are always running after money ( to consume more ) for the sake of unity of India.
Conclusion:
Only way to remove corruption is to overhaul the entire system which causes corruption. In the absence of any structural reform ( which will take several years and requires political will), corruption is in fact good since it will at least speed up the approval process resulting in GDP growth.
ENACTING LOKPAL WITHOUT STRUCTURAL REFORMS IS BAD FOR ECONOMY AND WILL FURTHER CAUSE CHAOS SINCE GOVERNMENT OFFICIALS WILL BE WARY OF TAKING DECISION FEARING BACKLASH.
lets see the following in Part 2 of this article:
1, WHY BRINGING BLACK MONEY TO INDIA WILL STROKE INFLATION AND NOT GOOD FOR ECONOMY?
2 . WILL BRINGING BLACK MONEY TO INDIA KILL INDIA'S EXPORT SECTOR INCLUDING IT?
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