Published On: Thu, Mar 3rd, 2016

Missionary Blueprint

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Its not about the question, ‘Is India changing’ , Its about india has to change and put in more rational and progressive systems in place. With the new Government in place, here are some of my suggestions that could be taken into consideration for achievement of national goals …


I. Personal  Taxation

No income tax should be levied on the interest earned on fixed deposits kept with PSU banks. Interest rate can be brought down slightly and the benefit can be passed on to the borrowers on loan portfolio. PSU banks , which account for bulk of the fixed deposits will be spared of the enormous  work burden and administrative cost relating to TDS work. Senior citizens ( most of whom claim TDS exemption based on 15 H forms) can be given slightly higher interest rate to compensate for any loss arising out of general reduction of interest rate on FDs, now  suggested.

Senior citizens above the age of 70 should be exempt from filing of income tax returns. In fact, it may worth considering total waiver of income tax for resident individuals above the age of 70. With small pensions and lack of adequate savings, senior citizens are faced with increased medical expenses.


To augment direct tax revenues, all sections of the society should be brought under tax net. Small traders , small businessmen, professionals, agriculturists (other than small and marginal farmers) should be taxed. To encourage voluntary compliance, tax slabs can be on presumptive basis  depending on the location of the tax payer,  likely revenues,etc. Tax can simply be paid into the nearest PSU branch just quoting their PAN details. No need to file returns.

As far as dividend tax is concerned,  the company should bear only in respect of small shareholders holding say upto  10,000 shares. For the rest, the recipients of dividend must bear the tax burden. The current system of dividend of even Rs 100  or 200 crores is tax exempt is not in tune with social justice. The same should be made applicable for mutual fund units also.


A new financial institution for industrial reconstruction and rejuvenation will need to be set up for taking over all the NPAs relating to  loans to industrial units  of PSU banks. Industrial loans form the bulk of NPAs of PSU banks.  The new institution will have its capital fully owned by the central government. The capital can be partly by way of guarantee capital with no outflow of funds. All the NPAs transferred from the banks will be categorised into three categories A,B,C at the time of transfer by an external expert committee assisting the new institution. The transferring banks will be allotted tradable bonds with discount of 20% for A category, 35% for B category and 50% for C category for the outstanding principal loan amount (No interest component can be added to the asset value.) The new institution will then examine the possibility of assisting the potentially viable units through soft and long term loans.  Change in management or selling the units to other well run companies in the same industry sector will also be options while restructuring. Once PSU banks are relieved of major portion of their NPAs, they will be strictly monitored to ensure no further NPAs are generated. If  the banks do not mend their ways, the erring banks could get merged with stronger banks.


It is to be ensured that when a project is tendered out by a government body or PSU, all clearances like forest clearance, environment approval, right of way clearance, etc are in place. Most projects in Transmission and Distribution sector suffer from above shortcomings resulting in project cost and time over runs  and contracting companies becoming sickand NPA  in the process. The tenders must also have provision for cost escalation in case of time over run due to any of the clearances not in place. This is typical of tenders floated by Power Grid Corporation where there are no provisions for escalation , but contains stiff penalty provisions for delays.

Many power projects are being executed in very difficult areas affected by terrorism, naxal violence as also in difficult terrains. Such projects must be classified as hardship projects and should provide for larger contingency allocation. Otherwise, there may not be any reputed contractors evincing interest in such projects. Small hydro electric projects of 20 MW to 40 MW should be encouraged particularly in the north east and Himalayan regions. Chinese companies have expertise in supplying such small hydro power projects.

Large nuclear power projects should also be set up to take care of long term needs. To soften the opposition for such projects and to seek the cooperation of the concerned State Govt, the Centre can consider allotting upto 90% of the power produced to the concerned State Govt atleast for the first five years of production. The State Govt can either consume or sell to other States. To encourage production of solar power on large scale, the govt (state or central) must insist that all new commercial buildings as well as skyscraper residential buildings  must have provision for solar power generation on their rooftops.



Industry should be encouraged to set up large multi product trading houses (like Japanese and Korean Trading houses in the past) to promote export of products from Small and Medium enterprises. Such trading houses will take care of quality certification, packaging and shipment which are crucial in a export business which SMEs find it hard to comply. Large Indian companies should be encouraged to take up contract farming overseas like Chinese firms are already doing in Africa. Large parcels of agricultural lands are available in Africa (Zambia, Mozambique, Madagascar,etc) as also in Latin America (Paraguay, Ecuador,etc). As arable land in India is diminishing due to rapid urbanisation, it is essential to look overseas for agricultural production to maintain our food security.

 Bilateral trade should be expanded many times with China, Japan, Brazil and West Africa. Project and technological exports should be given a big push to the sub-saharan African region and Latin America through GOI /Exim Bank credit lines on soft terms. An Entrepreneur Development Institute should be set up in Eastern or Southern Africa to produce more African entrepreneurs which will result in more Indo- African joint ventures.


The entire stretch of river Ganga can be divided into parcels of 30-40 kms or even less and entrusted with local panchayats or municipalities. These agencies will be involved while carrying out the cleaning operations of the river. Later, these agencies will be entrusted with the job of maintaining  the cleanliness of the river and prevent further pollution by the local population or industries. These agencies should be empowered to take action against the polluters under a special Clean Ganga Act and impose fine on the offenders. The agencies should also be supported financially by the Centre from the funds of Ganga project.

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