Get it rolling

The task before new Govt is to cater to both -- urban and rural population of India, and ensure that both grow, writes Infosys chairman NR Narayana Murthy.

We have completed one more general election and the people have spoken. To me the message is clear. The ordinary Indian is demanding the bare necessities of life — drinking water, food, power, education for his/her children, access to health services and security of life.

We have a complex situation today. There are two Indias living side by side. The urban India, modern and needing economic freedom and better infrastructure to grow; and the rural India, crying for social investments and investment in agriculture. The task before the new government, therefore, is to cater to both and ensure that both grow. I expect the new government to focus on the social sector, agriculture and infrastructure. What business expects is more liberalisation and greater investment in infrastructure to enhance competitiveness.

In the social sector, I fully endorse the focus on children in the common minimum programme. I expect the institution of a national mid-day meal programme to ensure that no child is hungry. Additionally, enhanced investment in the Sarva Siksha Abhiyan will ensure universal primary education. I also suggest that school education be handed over to the local community in villages, to ensure greater accountability, focus and better quality. In the urban areas, a school voucher programme for government schools may be a good experiment to try. Additionally, I recommend that private schools be encouraged, especially those run by NGOs and charitable institutions.

In higher education, I would suggest that the university system be made autonomous. To ensure financial independence, the government could give grants based on student population and research grants based on proposals. I am a votary of differential in fees to ensure that scholarships and free-ships go to deserving candidates only.

The health sector needs to be reformed. I suggest institution of a national health insurance programme. By securing private sector investment through the insurance companies, a widespread network of health centres can be built. The insurance premium for the below poverty line category could be borne by the government.

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I suggest a concerted drive to ensure availability of drinking water in all our villages within three years. It is equally important to ensure that every household has a toilet. Unless drinking water and sanitation are available, health will be a casualty. Research has shown that citizens develop a stake in society when they own their dwelling places. We need a massive thrust on creation of housing for the poor. Further, I suggest a push for rural electrification, so that all houses have power within two years.

The lack of progress in agriculture continues to drag India down. The issues that confront agriculture are lack of water and power and lack of access to technology. I support the government’s endeavour to complete all irrigation projects in the next five years. The reforms in Andhra Pradesh could be an inspiration and a separate power network can be built to ensure minimum power. I support charging farmers a minimum tariff, as this would ensure efficiency. However, the current trend of supplying free power often results in power theft. The best option would be to bill every farm connection and give a monthly rebate, such that each farmer gets a certain amount of power free.

Yields in Indian agriculture are very low and I suggest mass training of farmers to ensure that they know the latest developments in agriculture and institute good practices. They should be encouraged to go in for water-efficient agriculture, like drip irrigation and watershed programmes. At the same time, I suggest the creation of a National Market for the farmer, so that he can freely sell in any place that offers a fair price. I also suggest the creation of a cold storage network.

Infrastructure inadequacies continue to be an issue in India. What this sector needs are better policies, reduction of government control and quicker decision-making. Transport needs special attention. Enhancement of work on the National Highway programme and the rural road programme are important. The existing financial model works and impediments should be reduced to complete the projects in hand. Additionally, the railways are becoming a choke point for industry. I suggest that the railways look at completing all pending projects within the next three years. I urge the government to enhance investments in the railways by at least 50 per cent this year, by allowing the railways to access the bond markets. With low interest rates, this is a great time to invest and the market needs more instruments for investment.

Indian airports should be privatised. There is no strategic advantage for a country in having the government manage airports, except for air control. I urge the government to adopt an open sky policy for India. Today, investors cannot fly into India easily, nor can Indians fly out easily. The open sky policy could substantially enhance the productiveness of India and create jobs.

The power sector has grown because of reforms and needs to be further encouraged. It has a large capacity for debt and investment and needs more economic freedom. Special attention must be paid to increasing efficiency in distribution.

The public sector and disinvestment debate mistakenly equates the common good with the public sector. The common good must take precedence. Remember the time when it took months to get a telephone connection or a gas connection. Now competition has done away with this problem. What is required is the existence of multiple players and a fair system. Monopoly in the public sector, as in the oil area, is against public interest.

What does industry expect from this current budget? One of the biggest issues hindering industry is the slow legal process in the country. India has only 13 judges per million people. (The US has 100 judges per million.) The legal system requires substantial investment to increase the number of judges, improve judicial infrastructure, introduce IT in its management and generally reduce the time to get a judgment. This will substantially improve the business environment in India and enhance the confidence of business in the legal system. It is unfortunate that every time we sign a contract with an overseas client, there is an insistence that India’s jurisdiction be excluded.

Industrial growth can only be encouraged by increasing consumption. Reduce indirect taxes on items of mass consumption, increase consumption and investment will follow. I suggest that indirect taxes on items of mass consumption like FMCG articles, consumer durables and electronics items be reduced to 8 per cent to encourage consumption. This will lead to greater investments and will also improve the quality of life for our people.

The automobile sector generates jobs and has tremendous scope for growth. I suggest a reduction of taxes, especially excise duty on cars, from 24 per cent to 16. In this way, in the next two years India can increase production to two million cars a year from the one million at present. This will make India a global sourcing base for cars and change the face of the country.

How should the government generate resources to meet the massive requirements? Tax rationalisation, increased consumption and better tax administration can generate substantial resources. The Kelkar Committee report contains many good recommendations to increase tax compliance and revenues. These need to be implemented earnestly. Bringing in a VAT system, computerising the revenue department as has been accomplished in the IT department, and reducing indirect taxes would be some of the ways to bring buoyancy in revenues. I do not support increasing taxes, as increased taxes have always led to more leakages and diminishing returns. A focused drive to reduce spending should increase resources.

Mr Chidambaram, we are waiting for a great investment-led, consumption-oriented budget to put India on the high-growth path.

(The writer is Infosys Technologies Ltd chairman and chief mentor)