2 Is Firm in 2003

(Published in Banking Services Chronicle January 2003)

Happy New Year! Note the digits of the year 2003. The unit's digit has started outpacing the thousand's digit. With one end firmly standing at 2, the other end can freely score. That’s what we need in life as well. The stream of novelty should flow on a base of firm rocks of conviction.

Unfortunately, as the Dalai Lama puts it, “we live in a time of fast foods but slow digestion.” The firmness of the digestive system, which should ideally assimilate anything new, is in fact challenged by the flurry of fast foods. It is good if new ideas come and shake you out of your slumber. But it is bad if they overwhelm you and prey on your sleep.

It is therefore very important to know the nature of the base before bombarding it with alien particles. Take the case of Indian radial tyres. In the absence of a specification from the Bureau of Indian Standards (BIS), the Indian manufacturers follow the European norms as passed on to them by their technical collaborators like Continental AG or Pirelli. Now, in Europe the ambient temperature hovers around 23° C. In India, on the other hand, the mercury often soars to 40° C. This results in premature bursting of tyres due to excessive heating on high-speed corridors like the Mumbai-Pune Expressway.

Or, take the case of bicycles. DP Mishra, a professor of the aerospace engineering department at IIT Kanpur, has designed a bamboo bicycle. It is obviously bio-degradable and therefore eco-friendly. So, like China and Japan, we can minimise pollution from petrol and diesel by using bicycles. And go a step further in protecting the environment by using the bamboo version. But wait a minute! Do we provide facilities to our cyclists as those two countries? Certainly not. Therefore, Mishra makes a plea for tax rebates for cyclists, free insurance and accident compensation.

Or, consider the preliminary draft proposals made by the committee headed by Vijay Kelkar. To me they seem to be wonderfully simple. They advocate for a scheme that is bound to increase simplicity, transparency, justice as well as revenues. But can a simplified scheme that does away with exemptions work in a complex India?

In fact, it is my personal opinion that we should do away with slabs altogether. Let all incomes be taxed at a uniform rate of 20 per cent. Such a suggestion, however, will give rise to a hue and cry from the so-called socialists. But you must see through such socialism. Behind the mask of ideology lurk the vested interests of the bureaucracy and the accountants. Simplicity and transparency are a direct threat to their professions. Besides, the Indian mindset is used to obtaining sops and haggling. We prefer buying an article at Rs 80 after higgle-haggle than at Rs 70 on a fixed price.

Similarly, we can’t digest the idea of paid higher education. Whenever colleges and universities raise their fees, an uproar can be heard. As if higher education were a fundamental right! And this in a country where children still don’t have access to primary education! The idea that institutes of higher education be treated as corporate houses causes resentment among students who mindlessly pursue degrees.

Again, look at the way we are cautious while liberalising our economy. We love fast growth but slow change. If industry has to grow, investment needs to be made. When large amounts of money are needed in the market, the RBI is slashing bank rate and cash reserve ratio (CRR) by tiny margins. Now, 0.25 per cent is a pittance.

Or, consider the hire-and-fire approach we are adopting. A lot is being done regarding exit policy, golden handshakes and VRS. But do we have the accompanying social security that absorbs the risks involved in job mobility?

Let us learn from the new millennium. And make our thousand's digit (read conviction) firmer. Let us go for fast foods but have a strong digestive system.