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Re: quick resp.-Hong kong

Dear Kush, thanks for your email.Sorry that i did not respond  sooner. 

first of all, no 'ji' business please!

as for HK model being suitable/unsuitable for note issuing in india, i have
to be frank and admit that i have little understanding of the issues
involved. it wud be nice if some one with better understanding could
explain what exactly is involved. it would appear that what is needed is
fiscal discipline to be imposed by the monetary authority, and transparent
rules. it would seem to me that private sector tends to be more efficient
in any business venture, and issuing of notes too could be considered an
industry....just as any other banking related business.

what i suggest is that ALL business activities, including public services
such as transport, postal services, communication, utilities (water, gas,
electricity etc) should be run by the private sector, albeit under stricter
government control(eg pricing, quality of service etc) when it comes to
essential utilities. i have to admit once again that i have not studied
these issues in the context of india, and i have NIL expertise in these
matters. all that i can see is that this model works extremely efficiently
in hong kong. This is the most laissez-faire administration you can find
any where, and i can assure you that it works very well

i fully realize that it is extremely difficult to change an established
system...it should not even be necessary if the present system works well.
it is my understanding that reserve bank of india is relatively efficient
(although it is definitely overstaffed with non productive personnel).
privatization of industry should be our long term goal, but the process
would have to be very gradual, priority being given to sectors which are
not running too well under public sector.

as a first step, all such services could be brought under autonomous bodies
with government as well as private sector participation. goal should no
govt subsidy as far a practicable. extremely difficult tasks which can be
carried out only under a very stable environment....are we ever going to
have that in india? Gods will have to help!  in the meantime the layman
needs to be educated, and i suggest that should be the goal of IP. any
fliers etc would have to be printed in hindi as well as other regional
languages so that the message is carried to the comman man.


At 09:24 AM 27.08.98 -0700, you wrote:
>Dear Sureshji:
>The wrong impression was given that I "dismissed" Hongkong
>economically. I did not. As you will remember the issue was of polity
>(administrative) and, in particular, whether issuance of currency be
>done through private banks.  My response was in that context:  We hope
>that sometime in the near future India will have a robust federal
>structure.  In that model there will be powers and functions alloted
>to the National government and the state governments.  Issuance of
>currency would naturally be the function of the national (central)
>government.  Further, in the same context, I envisioned that Banking
>and commerce will be under state laws.  The only "bank" that the
>central government will have would be the central bank or as it is
>called the reserve bank in India.  Based on the principle that
>government has some inherent functions, I was of the view that
>currency issuance should not be privatized.  

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