I am continuing by summarising the points that I gave in a talk at the Charcha 2020 event.
India needs to borrow $2 trillion from global financial markets which are flush with funds. There is about $15-20 trillion earning zero or negative interest globally. All India needs to do is to guarantee a positive rate of return and give global investors the confidence that it will meet its obligations in the years and decades to come. The world needs India, and India needs the world.
The question then comes: how will India pay back the money it borrows? The two obvious answers are non-starters – printing money and increasing taxes. Both will have serious consequences and will push India further down the hole. As has been said, today’s fiscal deficits are tomorrow’s taxes. Besides, the borrowings are in dollars.
In effect, we are solving for our credit constraint by borrowing from the world. We are also releasing the credit constraint for the poor when we give them the money. By borrowing now, we can grow the economy, and the poor can grow their wealth. With the increased wealth, we can repay the loans.
What India needs to do is to monetise its surplus public assets – minerals, land and PSUs. This is the key that unlocks the process of wealth creation.
India’s surplus public wealth is estimated at $20 trillion. This comes to 15 lakh crore – 1,50,00,00,00,00,00,000. That is 15 followed by 14 zeros. This is wealth that belongs to the people of India – Rs 50+ lakh for every Indian family.
The repayment of the $2 trillion raised can be guaranteed by the $20 trillion of India’s surplus public wealth.
An example is the public wealth locked up in the 1000+ ‘palaces’ that are occupied by India’s ruling class (politicians and bureaucrats) in Lutyens’ Delhi. The market value of these British-era bungalows is about Rs 5 lakh crore, or about Rs 20,000 for every Indian family. Creating a Prime Minister’s Lutyens’ Delhi Liquidation Relief Yojana would be an excellent first step!
We have discussed jobs and money. What’s also needed is the plumbing that entrepreneurship and wealth creation needs. This is the plumbing that opens the tap of prosperity.
Tomorrow: India’s Mission 10-20-30 (Part 9)