Prosperity Actions – 2
He set about freeing sector after sector. The first and most important was education. As LKY had explained to him, no nation had ever become rich without an educated population. For far too long, the Indian state’s interventions had hobbled the sector. He got rid of the government controls. The free market was allowed to operate in education. Any firm, any corporation domestic or foreign – was now able to provide any educational services at whatever terms and conditions they saw fit. Dhan Vapasi had already put money in people’s hands, enabling them to pay for education.
The next was to get the cycle of job creation underway. For that, two things needed to be done: reforming agriculture and eliminating the bottlenecks that plagued manufacturing. India did not need half its population in farming – many of them were barely eking out a subsistence existence. Agriculture had always been plagued by government controls. What farmers buy, from whom they buy, whom they sell to, how they sell, at what price they sell – government regulations had starved farmers. Farmers could not even sell their land to non-farmers making exit from subsistence farming almost impossible. He removed restrictions on land use and created a free-market agricultural sector. He gave farmers freedom, saying that they did not need more subsidies which come with controls and constraints. Agriculture became more remunerative with the consolidation of small farms and fewer people, which drove mechanisation.
The path to prosperity and upward mobility lay in opening up the economy to get manufacturing going so that higher paying jobs could be created. He got rid of import tariffs. LKY had explained to him that a tax on imports is a tax on exports; open up the economy and let the magic work. He also undid the draconian land acquisition and labour laws. Initially imports rose but so did exports as firms took advantage of the low tax base and easing of land, labour and capital laws and rules which created the necessary conditions for businesses to grow. Surplus labour from the farms got absorbed in manufacturing and incomes started rising. Consumers also got the best products at the lowest prices.
He devolved power to the states and cities. This helped decentralised decision-making, bringing it closer to citizens. People’s problems were best solved at the level closest to them. India desperately needed new and better cities. As LKY had explained to him: the story of prosperity was the story of urbanisation; villagers do not become rich. By getting the states to decentralise power and funds to the cities, he ensured that the third tier of government started functioning. A slew of urban reforms made directly elected mayors accountable to the local populace and kickstarted the urbanisation drive.
Over the first year, he abolished most of the Central government ministries to right-size government. His big focus was on ensuring speedy justice. Police reforms at the state-level and judicial reforms at all levels ensured that the wheels of justice moved speedily, and were shielded from political interference. “3-2-1” reforms ensured that all pending court cases were cleared within 3 years, any new cases adjudicated within 2 years, and appeals settled within 1 year. This increased trust in the state and was another enabler for the growth of investments and job creation.
He removed reservations based on caste and religion. He said that all policies must follow the “generality principle” which mandated that all citizens must be treated equally by the government. He explained that discrimination created perverse incentives and damages social cohesion by creating animosity and resentment between groups. Past governments had actually encouraged religious conversion by providing privileges to specific religious groups. This was clearly immoral and must be prohibited. It was ethically wrong for the state to discriminate among citizens who are individuals worthy of equal moral worth and respect.
And so the foundations for a Nayi Disha for India were laid. The first year was hard work, but eventually very rewarding. Like free people everywhere, Indians too flourished. Once uncaged, no one wanted to go back to the licence-permit-quota-raj of the past. Wealth creation became a booming India’s new religion.