E Sreedharan
I am not in favour of deficit financing either in the form of printing of currency or through borrowing. There are two ways to raise funds:
Thrift: Minimum government and maximum governance was a welcome slogan raised by Narendra Modi. Though it is yet to be fulfilled, the efforts are slowly and graducally getting the momentum. Having said that, the condition of the railways is a glaring example of liberal and unreasonable spending. I had worked for railways for 36 years. Based on that experience I can state that several positions can be abolished and expenditure can be minimised by 25 per cent. What we come across is high expenditure and low productivity. Passenger fares have not been increased since the last about 15 years. Even if it is increased by 25 per cent people will gladly accept it.
Increase in revenue: We have to increase the municipal and panchayat taxes. House tax has not been increased for the last 10 years. It can be doubled. Land revenue remains untouched too. Land and house taxes abroad are nearly 20 times more than those of ours. It is a matter of relief that GST will increase the tax revenue. It can increase the tax revenue by 2 to 3 times.
No development is possible sans funds. But, I believe that borrowing is not the right method to raise funds. If we borrow, we have to pay it back and we have to pay interest without fail. For example, 90 per cent of the Kerala state’s revenue goes for salaries, interest, etc. Merely 10 per cent is available for development!
1) Another important and serious task is land acquisition. The new government at the Centre was supposed to formulate new laws in this regard. Unfortunately the same old law of Congress regime is still followed. Compensation for the land acquisition should not be exorbitant, but within a reasonable rate.
2) Opposition from environmentalists is a serious issue coming in the way of development. Every new project invites the wrath of environmental protest.
Governments have been talking about private investment and PPP (Public-Private Partnership). But, it is significant that private investors will not come forward if they cannot get 10 to 15 per cent return. On the other hand, our public investments are generally not profitable. Public expenditure for roads, bridges, etc. can be made profitable if toll collection is practiced. But, unfortunately people are always against toll collection. Since public sector hospitals, schools, etc. are not profitable, private investors will not be interested.
Avoiding increase in the tax and freight structure is a populist method of the governments of all times. But, it will land up in lack of funds for development. In short, more funds and more thrift are the practical solutions for the issue of infrastructure.
(As told to T Satisan)
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