Published Sep 14-18, 2020
There is no denying the gravity of the state of the economy. With a 24% year-on-year contraction in GDP during the April-June quarter, analysts are now predicting a fall of 10% or more for the financial year. The Central and state governments are engaged in a confrontation about the shortfall in GST compensation. The Central government is caught in a bind – to pump in more money and risk a ratings downgrade as the deficit rises, or wait and watch and risk prolonging the recession. There is also a growing clamour for augmenting the fiscal stimulus and putting money in the hands of the people.
Simultaneously, coronavirus cases continue to grow, and local lockdowns slow the recovery as the virus lives amongst us. The availability of a vaccine that will provide long lasting immunity is still unclear though there are reasons to be optimistic. Against a backdrop of fear, uncertainty and doubt, people are cautious with their spending. Many small and medium enterprises face pain due to demand slump.
So, what can the government do? A set of actions is needed to achieve the following:
- Put money in the hands of people without enlarging the fiscal deficit
- Get India to sustained 10% GDP growth rate
- Not entail any government borrowing which will impact the future growth
- Attract global investors and their trillions of dollars
- Not cause inflation
- Be politically popular and financially wise
- Solve the credit constraint problem that many Indians face
- Give families the freedom to make their own choices
- Not a violation of the fundamental rights of the people
Sounds like Mission Impossible?! And yet, there is a solution which can meet all the above requirements – Dhan Vapasi. It combines two ideas – the monetisation of surplus public assets combined with universal wealth return. India’s public wealth of $20 trillion which is locked up in land, PSUs and minerals needs to be returned to the rightful owners – the people of India, who can then decide what to do with it. Dhan Vapasi is the one idea that can work as the economic treatment to help Indians recover.
The building blocks of Dhan Vapasi are these:
- We, the people of India, as the rightful owners of India’s public wealth, have a claim to the income from our public wealth
- Public wealth is all that is not privately owned. It consists of public lands, minerals, public sector corporations, government-owned financial institutions like banks and insurance companies, and resources such as the electromagnetic spectrum
- The surplus public wealth of India is estimated at Rs 50 lakhs per family
- Dhan Vapasi is the proposition that every family must receive a dividend income of Rs 1 lakh every year from the public wealth they own
- The government must be prohibited from taking any portion of that public wealth for its own use
The claim is that:
- Dhan Vapasi will eliminate extreme poverty
- Dhan Vapasi will create millions of additional jobs every year
- Dhan Vapasi will eliminate the need for the dozens of public assistance schemes that are riddled with corruption
- Dhan Vapasi will reduce public corruption —by stopping leakage of funds meant for public assistance
The people of India collectively own wealth that is not privately owned. That is called “public wealth”, which is in the form of public lands, the minerals, the improvements on the land, water resources, public sector corporations, financial institutions like banks and insurance companies, and resources such as the radio spectrum. These are public assets or wealth.
We all are shareholders in this wealth. It’s our wealth, in India, all around us. It’s not wealth — black or white — in foreign banks, which somehow needs to be brought back to India. The Indian government controls this wealth – much of which is lying unused, misused and abused. If this wealth is monetised and returned to the people, it can truly transform their lives and India’s future.
India’s public wealth is estimated at $20 trillion dollars. That would approximately come to Rs 1,50,00,00,00,00,00,000 – more than Rs 50 lakh for every one of India’s 25 crore families. Put in simple terms: India is rich, yet Indians have been kept poor. The median Indian family earns just over ₹ 1 lakh a year – less than ₹ 10,000 per month for a family of five. They save very little, if it all. This is what needs to change. This is why people need their wealth back.
What is needed is for the government to monetise this public wealth and return it to the people in manageable chunks every year – Rs 1,00,000 every year to every family. This would more than double the annual income for over half the Indian families.
Getting this wealth back means the people can choose how to spend it for their families. That spending, in turn, becomes income for sellers. When they spend on food, it is income for farmers. When they spend on other goods and services, it helps boost employment and creates jobs. The wealth return is universal and not means tested. This eliminates political and bureaucratic discretion, and thus reduces corruption.
How did the control of the vast public wealth of Indian end up with the government?
One of the things that defines a free country is the notion that the citizens are free and can own their property. Conversely, a country is not free if the citizens are subjects of some agency and don’t have full, unencumbered ownership of their property. By that measure, prior to 1947, India was clearly not free. Indians were subjects of the British crown, and the British government made the rules that governed India.
Post 1947, Indians should have become free but they did not. British-era rules continued to be enforced by succeeding governments, and the ruler-subject relationship between the government and the people continued. Instead of the people being the sovereign and the government their agent, the government continued to be the master and the people its subjects. The racial makeup of those in government changed but its imperial role did not. Two examples will highlight this.
Lutyens’ Delhi has hundreds of bungalows that house India’s politicians and bureaucrats. Built by the British, they once housed the rulers of colonial India. With the end of the British Raj, the skin colour of the rulers changed – but not their homes. Those who took over control of the government of independent India — politicians and bureaucrats — moved into those lavish quarters. Each bungalow, spread over acres, is worth a few hundred crores. It is impossible to justify that. How can those who were supposed to serve the public live like they were imperial rulers of a subjugated people, and extremely poor people at that?
A conservative estimate of the land value of Lutyens’ Delhi comes to around Rs 5 lakh crores. The aftermath of the pandemic has caused great pain to tens of crores of Indians. The proceeds of the sale of Lutyens’ Delhi rightfully belong to all Indians equally, rich and poor.
Each of the 25 crore Indian families could receive Rs 20,000 in the next few months. It is not a large amount but it will help the vulnerable families enormously to get back on their feet. With money in hand, their demand for goods and services will pull industry to increase production, which in turn will generate jobs. While helping the poor, it will give a much-needed boost to the economy without damaging side-effects.
(On a side note: I had written earlier about this idea of liquidating Lutyens’s Delhi. We ordinary citizens have to pay rent or buy our own houses. Why should the netas and babus get it for free? Like the rest of us, they should get a salary, and rent or buy whatever housing within their budget. This can be accomplished within a month. Remember, demonetisation was done overnight. The Prime Minister should give them all a month’s notice and demonstrate to the world that he means to correct the wrongs of the British Raj and that India is not going to tolerate it anymore.)
As another example of imperial rule, consider the existence of cantonments in India. The British Raj created military cantonments in more than 60 Indian cities and towns to quell rebellions from the “natives.” As a colonial power, it was rational for the British to do so. But military cantonments in the middle of a city are not justified in a free India — unless post-1947 governments consider themselves to be the new rulers.
Consider Navy Nagar at the southern tip of Mumbai. Created in 1796 (that’s not a typo — it’s 225 years old), it occupies 200 hectares of prime land. The Delhi cantonment takes up 4,000 hectares. It’s the same story in major cities such as Pune, Bengaluru and Ahmedabad. What’s their function? It cannot be protection from foreign invasion. Its prime function appears to be to provide private clubs, golf courses, fine accommodation, etc, to military and politically connected elites. In effect, public property has been usurped by the ruling nobility for their private use. This must be stopped.
These areas can be put to alternative uses to benefit the people — for housing and offices, schools and colleges, hospitals and shops, parks and recreation. Bringing these assets into use will create commercial value, which can then be returned to the people. There is a broader principle that goes beyond the use of public lands for the benefit of the public. It’s this: all public assets belong to the citizens, and they must derive tangible, direct and present benefits from them.
There are two powerful arguments that support Dhan Vapasi: the economic and the moral.
The economic argument is that of efficiency. For something to be efficient, it has to be free of waste. Not employing assets in their best use results in avoidable waste. Bringing all the assets — public and private — into productive use increases efficiency, and therefore increases overall produce. Countries that are more efficient are wealthier.
Dhan Vapasi brings all the available public resources such as land into production. It also provides the proper incentives for people to put in the effort to use those most efficiently because they are the owners. Owners care more than managers. When the public wealth is under the direct control of the people, they enjoy the gains or suffer the losses.
The economic argument stresses efficiency and gain. But even if you were to disregard that, even if people were not very good at economic decisions, even then it would be morally right to give people direct control over what belongs to them. The moral argument hinges on the immorality of theft. Depriving someone of their property is theft, even if the law says that it is okay to do so, even if the taking is done by the government. Theft and robbery is immoral and not justified even if the robber is better than the owner in its efficient use.
Not all legal acts are moral, and not all immoral acts are illegal. In our case, it is legal for the government to take our public wealth but it is not moral. It is still theft.
Finally, let’s remember that India is a democratic republic. The Indian government must not be allowed to treat the citizens as incompetent children that need to be forced and managed. Doing so is immoral and unprincipled.
Making it Happen Now
I had set up a team of experts in 2018 to draft the Dhan Vapasi Bill, which was sent to every Lok Sabha and Rajya Sabha MP. The Bill laid out the roadmap to making Dhan Vapasi happen. It envisioned establishing four Corporations. Surplus public assets would be identified by the Identification Corporation. The Identification Corporation would ensure clear titles to the assets. The Restructuring Corporation would restructure the assets to optimise the saleable value. The Auctioning Corporation would conduct the auction of the assets and the sale proceeds would be deposited in the Dhan Vapasi Fund. The Fund Management Corporation would manage the Dhan Vapasi Fund and return the wealth accumulated in the Fund to the citizens of India using its beneficiary database.
This is the right time to revisit the Dhan Vapasi Bill. The pandemic has created an economic crisis that calls for bold actions. A 10% GDP contraction will hit poorest the hardest. Implementing bad policies could set India back by many years and push many Indians back into the poverty trap that they had just escaped from.
Returning people’s wealth to them would also reduce the size of the government, reduce the waste and inefficiency associated with the hundreds of schemes and subsidies that are supposed to help the needy but instead are a source of corruption. It will increase economic and civic freedoms, which will catalyse economic growth and job creation.
This return of public wealth must be universal because this surplus belongs to all, rich and poor alike. It is the moral thing to do and economic efficiency considerations support the idea. The non-discriminatory return of wealth also prevents vote-bank politics that plagues India’s democracy.
If we have to break free from the politics of poverty and build a path to prosperity, we need to dismantle the anti-prosperity machine engineered by our political class. The starting point is to recognise the right of every family to have an equal ownership of the public wealth of India, and receiving income from that in terms of unconditional annual transfers. Taking away public wealth from government control and returning it to us, the people, is a necessary and important step towards comprehensive freedom that Indians must have in a free India.
Dhan Vapasi is the universal prosperity revolution that can fulfill the Constitution’s promise – to secure for all citizens freedom, equality and prosperity. Dhan Vapasi is the real freedom to live life on our own terms – without the government as our master, with fellow Indians as partners in progress. It is about fairness and justice. It is the right of every Indian.
Here is a compilation of all the relevant additional information about Dhan Vapasi.