I am continuing by summarising the points that I gave in a talk at the Charcha 2020 event.
Wealth creation will be driven by entrepreneurs and private enterprise, and not the government. For too long, India’s government has put roadblocks for entrepreneurs. Every one of those bottlenecks must be removed – India’s entrepreneurs need freedom. The constraints need to be put on the government, not the entrepreneurs. The government does not create wealth; entrepreneurs do.
The starting point needs to be real reforms – land, labour, agriculture, education, and so on. There have been many reports and suggestions made on all the structural reforms India needs. This crisis is a great opportunity to dust off all those reports and start implementing the good ideas. A simple rule of thumb is that it must put limits on the government, and free the entrepreneurs. Voluntary exchange between individuals is what drives wealth creation and government officials have no business interfering in the process of wealth creation.
One critical reform needed is in the enforcement of contracts and the efficient resolution of disputes. If there is no respect for the rule of law, then investments will not happen. What India needs is 3-2-1 Justice – all pending cases must be cleared within 3 years, new cases must be resolved within 2 years, and appeals settled in 1 year. Only then will entrepreneurs have the confidence to do what they do best – solve problems and create wealth.
Taxes need to be reduced to ensure more money stays in the hands of people and corporations. India’s taxes are too high. They must be lowered such that no tax (income, corporation or GST) exceeds 10%. Among other benefits will be the reduction in the size of government, which will limit the damage that it can do.
India’s cities need to be freed from the clutches of the Central and State governments. Cities are where wealth creation happens. Cities are where poor people want to migrate in search of opportunities. Over the next 15 to 20 years, 40 crore Indians will leave their villages and move to cities in search of a better future. Swantantra Cities will have directly elected and empowered mayors as the starting point for urban governance reforms.
Finally, there is a need to have clear titles to all property in India. This will allow the poor to unlock the value of their property and also ensure that commerce can flourish without someone laying claim to a property based on some questionable document.
This is the plumbing India needs to put in place for Mission 10-20-30 to succeed.
Tomorrow: India’s Mission 10-20-30 (Part 10)