Subramanian Swamy has been regarded as one of the top economists of the country. He is been a very successful in helping economic growth rate during the PV Narsimha Rao government and also during Chandrashekhar government.
To his credit, he has worked with Nobel laureates and world economists on different economic models which can help country achieve good growth rate.
Somehow Dr Swamy is not very happy about the steps taken by the finance ministry to revive economy and has many times alerted Prime Minister Modi on the economic crisis. During an interview with the News18, he highlighted few points as to how the economic growth can be brought to 9%.
Dr Swamy in the interview said that he strongly pushes for the abolition of the income tax saying that it will have immediate change which public would take notice of. “Whatever you do, the public must see immediate change. I think the first thing we should do is abolish the income tax. It’s such an easy thing to do, but they haven’t done it.”
Dr Swamy says that abolishing income tax will immediately boost the savings rate and subsequently revive the investment cycle. He adds that revenue mobilisation through income tax has become redundant and it needs to be “scrapped” and suggests spectrum auction and coal block auction to be an alternative for revenue reported Network18.
He added just like 2G, the 3G and 4G spectrum can be auctioned which will bring more money to government than what income tax can bring.
He says that the second point which requires firm action is the cut in the interest rates. Dr Swamy said that the reason he opposed former RBI governor Raghu Ram Rajan because he collapsed the market implementing high interest rates. The way to start employment cycle is by lowering the interest rates. “You must bring down the interest rates to 9%, and raise the fixed deposit interest rate also to 9% to encourage savings. The rate of interest is an instrument that affects the small and medium industries.”
He said that the bug industries can survive by borrowing money from US for even 2%. But the medium and small scale industries will suffer if the interest rates are set 12-18% as they are the ones which provide mass scale employment.
Dr Swamy pitched for private investment and encouraging entrepreneurs to set up business and industries in India. He said there is a lack of trust and low confidence is the main reason for diminishing investments and government must take immediate action to boost investment.
He says that bringing back black money will help reviving the economy. He claims 120 trillion, or 60 times the revenues from tax collection, are stashed in tax havens abroad which need to be brought back invoking the UN Resolution of 2005, which was ratified by India in 2011. The United Nations Convention against Corruption (UNCAC) is a legal anti corruption law which strengthens the international law enforcement and judicial bodies between different countries to help bring back the black money.
He said to avoid black money stacking, the lower denomination should be more in circulation compared to high denominations and Rs 100 notes should have been six-times more for demonetization to have been completely successful.
So, he says by implementing few simple techniques, the economy can be revived sooner than expected and growth rate can be taken to 9% by March 2018. It is important for the government to take his words seriously given the background of his efficiency and knowledge.