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Re: solns:




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Hi Sanjeev,

Thanks for the caution and helping me realize the error. I am not proud
of appearing to make personal allegation against the former Prime
Minister. My posting certainly did deviate from its purpose when I went
on to pass a sort of judgment when I characterized Mr. Gujral as one of
those "unworthy jokers". I take my words back. In fact, I do find him to

be one of the good politicians our nation has.

However, on the issue of a the prime minister making such a profound
decision, I do find it unacceptable. Yes, there should be legislation
against the central government dictating the state governments on
salaries and expenditures that ought to be the responsibility of the
states, especially when that kind of decision has the potential to
severely impair the state's economy. Barring minimum wage requirements,
the Central Government should not have a say on how much salary should
be paid to the employees under the payroll of the state governments.

The Fifth Pay Commission also recommended something else that Perhaps
Mr. Gujral found very easy to skirt. Alongwith recommending across the
board salary raise, the commission also recommended a 30% reduction in
the manpower employed by various state governments. Simply because a
loophole of reducing the staff within 10 years, was found, the
politicians in power found it easy to pass the difficult task onto the
future governments, while taking the credit for doling out money to the
employees without even thinking about the revenue deficit such a
decision would cause in the immediate future.

It is understandable that with such a raise, the employees/bureaucrats
could use some badly needed relief. But, if the unattractive reality of
messy financial state of the states and the central governments is not
confronted soon enough, then any of those jobs are not guaranteed to be
saved let alone keeping the relief that is sought by implementing this
Fifth pay commission recommendations.

Frankly, I think by perpetuating the socialistic system, we have created

this problem ourselves. The longer we keep pretending that governments
will have jobs for everybody, and that everyone graduating from a
college can hope to join ever expanding and hopeless bureaucracy to earn

their living, the more difficult we make it for the future governments
to get out of the mess.

We are already in deep trouble. There are no easy solutions. Talk of
privatization is easy, but private investments won't come unless we set
our house in order, create some fiscal discipline, check interest rate,
control inflation and ever increasing fiscal deficit. Unless there is
proper infrastructure, such as communication facilities, roads, bridges,

and power supply, business cannot think of setting up a ventures in
Indian heartland. Unless there is proper protection against the "private

armies" and religious fanatics or lawlessness, private enterprise cannot

imagine making inroads in real India, and unless that happens, you can
forget about creating jobs in private sector or alleviating poverty.

Certain rules should be very clear. Governments should get out of the
places where it does not belong. It should immediately privatize every
steel, cloth, watch, or automobile factories, no matter whether such
ventures are profitable or loss making, government simply does not
belong there. It should only retain the rights to enforce regulations
about standards, quality certification and enforcement, and enforcement
of laws against human rights violations and discrimination in public or
workplace.

It should raise money by selling every such venture which does not
belong to a government, totally eliminate subsidy on Power, while
retaining the necessary subsidy on food items for the poor. Then it
should increase spending upto 20% or more of the current GDP on primary
(First 8 years of) education, and setup grants to fund higher education
for needy students while partly privatizing University Education.
Government should also increase its investment in the basic
infrastructure such as Roads and Bridges to make every part of the
country accessible to entrepreneurs for business.

Finally, the government should completely do away with free lunch for
anybody. No Tax Holidays to anyone. Tax Structure should be overhauled
too. We need three tier Tax Structure like most of the western
countries, where City, State and Federal Governments should claim their
share of tax from everyone barring the poorest (still requiring
everyone, including the poor to file regular tax returns). Governments
should create a system of indirect taxes from private enterprises to
fund the facilities like infrastructure and police protection the
governments must invest in.

One posting is very small space to cover all of these areas,moreover, I
do not claim to be an expert of economy, what I care about is fiscal
discipline and accountability on the part of the people in power whose
decisions have the potential of strengthening or breaking the backbone
of the country!

Thank You.

Umesh



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