Inflation

Salary increases and bonuses paid to Government employees through deficit financing (when the Government ‘prints money into existence’) makes them temporarily happier as they, at that moment, are oblivious to the fact that they are being tricked as the extra money chases the same goods, debasing the value of the Currency leading to prices going up causing even more inflation. The quality of life suffers and they will soon end up not understanding how what they had seen as “good fortune” no longer seems so good. They will therefore again demand more. Such inflation of course also, breeds discontent in the rest of the people who do not qualify for such largesse and have to suffer from the effects of the inflation. Tasking the Central Bank (RBI) with controlling inflation by setting interest rates, is not really feasible or desirable, especially in these days when Private money has so large a volume that it can change the market and not be really controllable by the RBI. The RBI should be better tasked towards encouraging and increasing employment as its primary objective and look at stabilizing currency value as a secondary objective.

If at all considered necessary, it is easier to control inflation by adding an ‘Inflation Cess’ including both a National and a State element to the basic tax rate other than on food and other essentials, which can be determined and announced (say weekly – operative every Sunday from midnight) in the manner of the present interbank interest rate (as basis points), by both the National Authority (say RBI) and the State Financial Authority. Change in such a Cess could be triggered automatically by changes in selected predetermined variables (such as the cost of energy, or the cost of a basket of food staples etc.). and also, by the nominated National and the State Financial Authorities. This allows each State to also, monitor and react to intra State circumstances while still coordinating with the National circumstances in a transparent manner. GST and Inflation Cess thereon as suggested, will not affect the financial interest rates, which will now be divorced from inflation, and will hence, lead to stability in interest rates encouraging entrepreneurship and growth. Such inflation cess must have a ‘Sunset’ clause causing it to become inapplicable say, three months thereafter, unless renewed through due process.

Alternately it would be better to remove the effect of interest and let the demand for investment in productive assets regulate inflation. (See-”Money & Financial Boom & Bust Cycles – an inevitable outcome”)

Tourism

Both Domestic and International. – Encourage Tourism and infrastructure for related ventures by allowing for loans at lower rates of interest and over longer durations.

Tourism is the only activity that in a relatively short time can vastly increase the employment potential for the unskilled and semi – skilled and also, for folk artists, artisans and craftsmen. It also, has the added benefit of developing the Country and creating a greater awareness of, and pride in, its Cultural, Historical and Geographical diversity. It integrates the Country and builds unity in the people. This was well recognized by the effect of the recent G-20 meetings, held in various locations across the Country, on local developments and incomes. The 2025 Maha Kumbh Mela also demonstrated such benefits. Religious tourism should also be encouraged and facilitated, as other countries do for their religious places.

Foreign Worker Taxation

Encourage skilled people to bring innovative skills and technology into the Country. Encourage liberal ‘Double Taxation Avoidance Treaties’, ‘Most Favoured Nation’ and ‘Free Trade Agreements’ etc., especially with the lesser developed Countries in our Neighbourhood and also with other countries,especially in the Global South, with whom we have friendly relations, even if unilaterally this will also, further encourage trade and better ‘Nation to Nation’ relations and strengthen our position Internationally.

Over 2500 years ago the Sage Confucius, is said to have advised the Governor of Shey Province that – “To govern well he should keep his people happy by enabling them to meet their needs and to encourage immigration of others into the province so as to encourage innovation and trade’:

This advice holds good even today.

The Government should encourage ways to get rich out of our differences (by trade). Encourage Travel and Tourism especially within the Country, to develop an attitude of appreciating what we have in common and enjoying the differences. This leads to good relationships.

However, if the other Nation consistently evidences no reciprocal attitude, e.g.: Pakistan, or China. it is only realistic to withdraw such concessions to it.

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