How can we go about making Dhan Vapasi happen?
Developed countries can afford to fund UBI through their reserves, taxes and borrowings. India cannot do that because it will kill off future growth for a very long time. The right way for India to do UBI is to think of it as a universal wealth return funded by public asset monetisation.
I recognise that selling public assets immediately will be difficult and cannot be the first step. Yet, there is a need to get the economic engine of India moving. One way to do this is to borrow $2 trillion from abroad – from sovereign wealth funds and other foreign funds. There are trillions of dollars earning zero to negative interest rates (meaning they pay the banks to hold their funds) around the world. We need to tap into these sources, and promise them 1-2% in positive dollar-based, sovereign-backed returns.
The first trillion dollars can be used to activate the wealth return program. India has about 260 million households. Returning Rs 1 lakh each year to each family means a spending around $330 billion every year. A trillion dollars provides the money to do this for the next three years.
What Dhan Vapasi does is to free up unused resources. It is not printing and distributing money, but about bringing new resources to use.
Money in the hands of people will get the economy moving as they spend on necessities and more. The programme must be universal because there is no time to be wasted in bureaucratically figuring out who is eligible and who is not. Not to mention every Indian has an equal claim on these surplus public assets.
The second trillion dollars should be used to build the infrastructure India so desperately needs – housing, roads, high-speed rail, ports, airports, new cities, healthcare facilities, and so on. The government should make the money available for the private sector to build. This will also get job creation and manufacturing going rapidly and at a large scale. As global enterprises see the opportunity in the Indian market, they will start to move manufacturing to India – starting a process which will create jobs in India and raise Indian workers up the value chain.
In addition, India should cut all taxes to below 10% to become one of the lowest tax in the world. That would leave money in the hands of people. In addition to cutting taxes, the government must implement the structural reforms that so many have written about in the past.
Here are a few additional ideas I had written recently:
- Focus on the core things that a limited government should do – ensuring rule of law, protect economic freedom, property rights, free markets, free trade, decentralisation, and so on.
- We have to understand which ideas and policies made rich countries rich, and implement those by embedding them in a new set of rules for India.
- Government should get out of the way of people. Let trade and voluntary exchange flourish. Let the entrepreneurs take over the task of creating wealth. They will find ways to solve problems.
- And finally, for all of us: for 10 years, forget about everything that divides us, and let us all unite for a single mission – to rebuild India from the ruins of the virus, to make India the nation it was destined to be, to make every Indian free and prosperous in our lifetime.
As India prospers and grows, the ensuing wealth creation will enable India to repay the $2 trillion in the coming years by monetising the $20 trillion public assets once the economy gets going.
Tomorrow: India’s UBI Moment (Part 5)