Institutions working against fundamentals
DOGE highlights an important policy problem, one faced by India since independence. Indian institutions are working against fundamentals. It is time to correct that.
I don’t know how many of you worked with the Windows operating system of old. It had its quirks, and you needed to work with the operating system rather than blindly build your programs. If you tried to push the programs to the limit, the whole computer would crash, and you would lose your work. This could happen with inane things - say you opened two Excel files that were linked to each other and had macros and some conditional formatting. (I see some oldies nodding vigorously!)
Economics is the operating system of society.
It is quite like that old Windows operating system - it has its quirks. You got to work with it. Our institutions are like programs; they need to work with the fundamentals of economics. If you mess around, you get the “blue screen of death” or anarchy.
Dharma is the system of principles of society.
If you follow Dharma, you will automatically be on the right path. Dharma is not a religion but a code of duty, which we have discussed in great detail.
Indian Institutions work against the fundamentals.
Indian institutions do not align with Dharmic principles, which is well known. However, they also do not align with the economic fundamentals. For instance,
RBI is actively working against the poor and unnecessarily keeping the cost of capital too high.
The Finance Ministry has introduced regulations to simplify taxes, but the paperwork and reporting frequency is so high that entrepreneurs spend 800 man-days per year filing just tax paperwork.
GST has around 6-10 returns to be filed every month.
There is a lot of ambiguity because of differential GST rates and credit applicable.
If there are any discrepancies, the department seeks an explanation from the company as if the company is a tax evader.
The legal system is a black hole that you will emerge out of after 20 years without decisive resolution even if you were 100% right (for example, if you want eviction of illegal tenants).
If you are a farmer, you are doomed as everyone including the government is against you.
The government wants to acquire your land where they will pay 25% of the current value after 20 years. You can sell the land to the bureaucrats at 70-80% of the value before the acquisition is announced. That bureaucrat gets 2X the value from the government.
Everything from seeds, fertilizers, final produce is in the hands of politicians who change the prices or time of delivery (of seeds and fertilizers) as it suits them.
If you are an industrialist, you are doomed. By the time you get all the permits and licences the industry will change and the opportunity will be lost forever.
That the institutions are working against Indian interests is not an anomaly. The institutions are designed to be working against Indian interests. Their colonial hangover goes to the heart of these institutions. We need a heart transplant and immediately.
India is growing DESPITE this.
The strength of the India story is that India grows despite this. While things are improving, at the current pace, it will take another century to improve to acceptable levels.
I hope we get some department like DOGE to get all the bull-shit eliminated and reorient the bureaucracy and the institutions to work FOR India.
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