Subramanian Swamy has a very justified reputation as a thinking maverick. So when TiE invited folks to join a session to hear the great man live in a Q and A session, I jumped at it. The first question put across to Swamy was what would he do if he were to be made finance minister. Swamy’s mantras for the government: Simplify. Become smaller. He talked of two things that he would do. Lower interest rates and abolish income tax. According to Swamy, the cap for interest rates should be 9%. MSMEs are being pressurized by banks to pay uo, the grace period of the lockdown is now over. Some printing of notes by RBI can help with manage this domestic debt. What kind of capital spend would Swamy like to happen? Roads. Indian companies have been road builders for countries like Malaysia, Nigeria and Iraq. But when it comes to building roads in our own country, political interference hampers quality.
We collect about 8 to 9 lacs per year income tax. When the 2G spectrum auction was held, the government could raise about 4 lakh crores. Coal deregulation is promising to provide 11 lakh crores. 80% of India’s savings come from households. Ostentation is not a part of our culture. It’s avoiding income tax that makes people spend. We need to incentivize savings, not threaten savers. India can do very well, without the harassment of Income-Tax.
A lot of the growth in our economy can come from the agriculture sector. We can easily grow 3 crops a year, if water is available. The yield per acre is one sixth of what we have achieved in pilot projects in the Indian Council of Agricultural Research. The green revolution has helped, but it has only touched 10% of the population. We should negotiate with the US and Europe for removing entry barriers to agricultural products. Even today, Europe is importing mangoes from Africa, not India. Our milk production costs are one sixth of European farmers. if agriculture grows at 6 to 7 % a year, we can look forward to the 5 trillion economy.
When Raghuram Rajan was the finance minister, Swami questioned his logic of increasing interest rates. Rajan’s logic was that it would help control inflation. Swami felt that Rajan was the doctor who cured the fever by killing the patient. The United States had tried out the strategy suggested by Rajan during the depression era. Wages were cut, and this actually led to a decrease in economic activity and employment. People did not have money in their pockets to spend. Economic policy focus should be on putting money into the hands of people who are ready to spend it. Swamy is quite happy with the note printing done by Trump – and the direct transfer of this money to individual bank accounts. In India, we need to just print cash and hand it over to our migrant labour. There is a surplus of inventory lying in the retail sector waiting to be picked up.
The economy was in bad shape, even before the pandemic happened. What made matters worse was the speed at which the lockdown was imposed and the speed at which it is being opened up. The economic growth in the last quarter has been 3.1 %, a rate lower than the 3.5% of Nehru’s days of socialism. Swamy says that during his times as finance minister the economy grew at 8%. Narendra Modi has promised that the economy will become a 5 trillion dollar economy by 2024. That means a growth rate of 13%. He’s not sure where that growth is going to come from. The country does not need insecure leaders. Modi doesn’t like people telling him that he has got it wrong. Narsimha Rao was a success as a prime minister because he decentralized and delegated. His delegation to Manmohan Singh was what actually created liberalisation.
Most bureaucrats make decisions without understanding anything about economics. Case in point is the airline sector in the current pandemic. If all of them go belly up, the government is going to have a difficult time rebuilding aviation infrastructure. Modi’s track record on tax implementation has not been too great. GST remains a complicated tax. In his wisdom of centralisation, the collection of indirect tax revenues, earlier a state subject, via a constitutional amendment has now been taken over by the center. The GST was also plagued by a lot of glitches in the Infosys software that powers it. The GST network, which is a depository of all the GST tax collection, started off as a consortium led by private banks like ICICI and HDFC. Later on, under pressure from the likes of Swamy, the government handed over the functioning of the GSTN to public sector banks.
The next area of discussion was innovation. One of the things that characterizes Indian people is our aversion to risk and our fear of failures. We talk about the great glory that India has achieved in the software industry, but Swamy believes that most of what happens in the IT sector is just glorified blue collared work. The real technology play should be what we can do with indigenous resources. Hydrogen powered fuel cells, desalination plants, river linkage projects are what fire up Subramanian Swamy What should help us in this is the young generation. India in today’s time is a young nation. The average Indian is 25 years old, in contrast to the 35 year old Chinese, the 40 year old American and the 50 year old Japanese! When Reliance set up its plant at Jamnagar, the municipality refused to supply it any water, it did not have the capacity. Reliance went on to build its own desalination plant and now Reliance supplies water to Jamnagar municipality. The Kalpakkam nuclear plant near Chennai was not being supplied water from the Chennai Municipal corporation. They took things in their own hand, and built their own desalination plant.
The talk then veered towards foreigh policy. Swamy believes in a troika of India, United States and Israel. A win-win situation which Swamy thinks is possible, is Indian troops taking over in Afghanistan. The US will be happy and will be ready to offer financial compensation and weapon support to India in such a scenario. In the new world order, Russia’s role has diminished – it has become a banana republic and Swamy considers Putin to be a Chinese puppet now. He hypothesizes that the vaccine that Russia is so trying to sell is most probably a Chinese product. The Chinese have realised that they cannot sell anything anywhere in the world, so they will take recourse to selling through countries like Russia. Swamy talked about getting the exchange rate to 35 rupees to a dollar. Exchange rates are most psychological. If you look at India’s economy in terms of PPP we would be ranked number three. In PPP terms, the rupee should be at Rs. 21 to a dolar. Forex is a game of manipulation of demand and supply.
With Swamy around, you can expect the audience to ask questions related to secularism. Secularism not part of our original constitution. Ambedkar and company had put in Articles 25 to 28 in the Indian constitution, which allow all to practice and preach their religions. What the constitution says is that all religions are equal but they need to be practiced with reasonable restriction. The restrictions are in terms of morality, public order and health. Secularism was added to our preamble by Indira Gandhi as an amendment to the constitution. It is very difficult to interpret secularism. Interestingly, there is no equivalent word for secularism in Hindi.
The unity of the country is doubted by historians who talk of the Aryan-Dravida divide. There is no word called Aryan in any Indian language. Sanskrit has a word Arya, which simply means honourable, a person who is respected. Dravida was used for the first time by Adi Shankaracharya, when he had to introduce himself in one of his famous debates. Adi mentioned that he comes from Dravida country. Which means it means a place where 3 coasts meet. (Dra means 3). Another thing that unites our country is Sanskrit, the language favoured by Artificial Intelligence developers. 40% of words in Tamil come from Sanskrit. For Malayalam and Marathi, the proportion is 70%. Here is a school that has Sanskrit as a compulsory curriculum in the UK.
Indians need to learn to stand for our principles. Swamy narrated his own experience at IIT Delhi. Swamy was very vocal in opposing the emergency of Indira Gandhi. When he came back from Harvard to teach at IIT Delhi, Indira Gandhi talked to Swamy’s father, a civil servant, to try to counsel Swamy to tone down his anti emergency rhetoric, if he wanted to retain his job at IIT Delhi. Swamy refused and lost his job. It took aim a two decade court battle to ensure that IIT Delhi honoured his services. He was given a full compensation of salary with interest. He jokes that he made much more out of the court case then he could have made if he had stuck on at IIT Delhi as a professor. Interestingly, after being made to quit IIT Delhi, he fought his first election and became a member of parliament from Bombay North East constituency. Indians should learn to focus on how to fight, and not just on results. Bluntness is important in life. People don’t mess around with you when you have his kind of a reputation. But yes, it does create problems in implementation of his ideas.
The emergency was declared in 1976. Subramanian Swamy campaigned against the emergency abroad. When elections were declared he decided to come back to contest. He stood for elections from Bombay North East, a constituency which had places like Korla and Trombay. Swamy was disappointed to see that the highly educated states of South Indian voted en masse for the Congress. The Janata was wiped out over there. It was the illiterate population of UP and Bihar which actually got the Janata government to power. Democracy, unlike what a lot of the educated class thinks, is not a British inheritance, it’s an ancient Indian tradition.
Swamy was asked about election funding. The Indian mindset is that politicians come to you only once in 5 years. So the voter mentality is – take what he’s giving you and forget about him. If we have candidates who have done work in the public domain, candidates who can demonstrate that they can get work done, candidates who are accessible and they don’t take money to get work done, then such candidates will not have problems getting elected again. Election money power will be taken care of.
Swamy’s suggestion about tackling the menace of corruption was to have a hefty increase in penalties for the corrupt. The expected value from a bribe goes down considerately when you have a probabilistic high negative income attached to a bribe. Corrupt people know that if they get caught, they can manipulate the judicial system and ensure that judgments are delayed. We need fast track courts where the rule is that adjournments will not be given.
Swamy’s comment on the new education policy – diffuse. It should have had focus. One of the interesting recommendations that he had to make was about teacher salaries. You need to pay more to teachers in order to attract talent. Social revolutions will happen only when you have the best people coming into the teaching stream. My footnote: Maybe technology should help us make do with fewer teachers, but we need to pay them more.
He objects to foreign university campuses opening up. His son in law, who works with MIT, says that the likes of MIT are not interested in setting up Indian campuses right now. MIT is already able to deliver its content online. As long as you are not worried about the degree, the knowledge and courseware is available for free.
Another NEP gap is the emphasis on Indian history. We are not taught enough about our heroes like Shivaji and Chinnamma. About long lasting empires like the Vijayanagara and the Ahoms. We are not taught about the role that Subhash Chandra Bose played in the Britishers leaving India. The 1942 Quit India movement was a flop. What worried the British more was the threat of an army mutiny inspired by Bose. You cannot rule a country if the army is not with you.
Was happy that the moderator asked my question about job creation. industrialists learnt their lesson from the days of the struggle between Datta Samant and the textile industry, when a lot of textile mills had to close down in Bombay. Factory owners decided that they will spend more money on automation and capital equipment, instead of relying on labour intensive work processes. We need to ensure that most of our manufacturing continues to be labor-intensive. Companies need to ensure that some socialistic obligations are met. Companies should invest in the education of their workers’ kids. They should take care of basic needs like transport. What I may not agree with is his suggestion that if someone is to be removed from his job they should be given a compensation of three years salary! Adding employees would become a nightmare then for an employer. Swamy wakes up at 4 o’clock everyday. The first two hours of the day are spent reading. Reading continues after his lunch time siesta. He prefers reading biographies, because he feels that you learn a lot about life from people’s lives. His mantra for fitness at the age of 80. Learn how to transfer stress to others!