Monday, March 8, 2010

A list of things to make India better - Part 1

Now, I am not a professor of economics nor a person of the masses. But, I am a working citizen and a taxpayer. This is a list of ideas that I think should be implemented to make India better.

1) Removal of farm subsidies on fertilizer and electricity: This pushes the farming sector to ensure better better farming practices and become more energy efficient. It will aslo mean that lesser number of people will be involved in farming as only those with enough farm lands will survive the game. Political suicide, yes; supremely practical, yes. When people are removed from farming, they switch to other industries, which could do with skilled workers. Ideally, not more than 10% of our people should be farming. Imagine what we could do with those extra skilled workers.

2) Make high-speed broadband a reality and a fundamental right: The information age is the one which has propelled India into a high-growth economy. Yet, internet access at a non-commercial level has low prevelance, is expensive and absurdly slow. We need to make internet access a fundamental right and increase penetration. Government policy should allow for low cost, high speed broadband a reality for all Indians. If Australia, a country with two and a half times the landmass as India can do it, why can't we? India has only about 11% of the population using the internet, compared to about 48% for China. While mobile telephony rates are very low, internet access rates at extremely high. South Korea has the world's cheapest broadband internet. After adjusting for USD purchasing power parity, it comes to US85 cents a month per megabit. A simple calculation for USD PPP in India tells us that the purchasing power of 1 USD in India is about 17 rupees. (Nominal India GDP = USD 1,206,684, PPP adjusted GDP = 3,288,345, 1 USD ~= 45 INR). By comparison, an 8Mbps broadband connection in India  costs INR 2999 per month (navigate to link here), which means, the advertised monthly per Mbps is ~INR 375, or a whopping 19 times more expensive than in S.Korea.

3) Improve the postal system: India has an extensive and well developed postal system. It is also fairly efficient and cheap. But sadly, our postal system has fallen behind the curve and in the information age is not competitive. Proof lies in the mushrooming of numerous private courier services. Post offices are far and few between, unfriendly and time-consuming. It is time we used a model like that of Australia Post. It is fantastically efficient and highly competitive. Few simple things to make India Post better are:
  • Increase the number of post offices. There need not be full service offices, but should include essential services like ordinary, registered and speed post. Ideally, there should be a post office outlet within every 1 km radius at an urban center.
  • Bring technology to the post system. We must have the ability to buy and print postage online.
  • Make post office outlets multi-functional. They should sell stationery, packaging material, etc. How often is it that you've wanted to send a parcel and have fumbled for packaging? CDs, batteries, bestseller books; all stuff that one should be able to browse and buy at a post-office.
  • Tie-ups with corporates are essential. Most of the postal revenue is from non-personal mail. The post office should tie up with corporates and other offices to provide pickup services at the door. If I am say, a phone company, and need to send out 1 million phone bills, I'd happily use India Post if it can agree to provide me the option to pick up stuff at my office, instead of me having to go to the post office. This can scale from small to large volumes, guaranteed by the fact that businesses always have mail to send.
  • Rework the postal code. The postal codes are no longer as efficient. We need to have the ability to pinpoint to a single street in entire India using the postcode alone. A system similar to the UK, using alphanumeric postcodes or as in the US, using 'extension codes' are a good way to go.
Improving the postal system and providing increased broadband coverage would go a long way in improving online retail. If both are a reality, then online shopping can become real in India like it is in the US.

4) Roads and traffic: My pet subject. Make driving license tests stricter. Increase traffic fines. There is no sense if the speeding fine is only INR 300 when it costs about INR 150 for a single day in fuel costs. Ensure a 'points' system like the UK is followed. Automatic award of points for any and all traffice offences. Strict suspension or revocation if one gets too many points. Revenue sharing of fines between state government and police force, down to the last traffic cop. More on this in a separate post.

5) De-urbanization: Sounds contradictory to (1), doesn't it? But it actually means reducing the urban congestion at developed centers and developing alternate urban facilities. Tax-breaks, tax-holidays, deferred taxation are incentives that government can provide to promote business in lesser developed areas. Add road/rail/air connectivity, provide basic urban infrastructure of electricity, water and roads, provide tax-discounts to citizens moving there and you've done a lot to spreading the wealth and reducing your infrastructure issues.

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