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Planned & Organized Deficit Spending

Our population of 1.3 billion citizens entitles us to be ambitious and PODS can show the way to be so. It is to be noted that PODS is universally applicable also.

Photo Credit :

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When Prime Minister Modi visualized that he would be able to give every India Indian citizen INR 15 lacs I am sure that his natural instinct made him say so. It is possible. This is how:-
Assumptions:

No Supply side lag or no production lag

Commerce runs at No Profit No loss basis.

A government can plan & organize up to a 100% deficit and sustain itself even when there would be no taxes, no shortages of capital, no displacement of personnel & no inflation. USA ran a 25% deficit during the WWII years without any insurmountable problems. However, the key to successfully achieving this is an absolutely foolproof supply side….as everyone individually is a Demander as well as a Supplier in due course, the trick is to see that for every unit of demand there has to be a compulsory corresponding unit of supply resulting in no inflation or deflation. This can be replicated up to INR 7.5 lacs of demand as well as 7.5 lacs of supply of various goods, products and services that are need required by citizens. In this case, the Gross Deficit Product is INR 7.5 + 7.5= 15 lacs per citizen. INR 15 lacs is given to the citizen to buy goods, products & services which he/she him/herself is enabled to supply also….that quantity of gold required to back the amount demanded to buy. If there was only gold backing the currency, what would one do with 15 lacs of gold ??, but if 15 lacs of goods, products and services back this deficit, or is the underlying assets & value of these monies then a consuming and supplying market of citizens is created. By running up to a 100% deficit where money is a given, one can enable consumers & producers in any product, good or service market economy.

Given the state of current cashless technologies, monies need not be printed with paper, ink , security threads & machinery but issued electronically via the seamless electronic pipelines of the already in place NEFT/RTGS & other systems all the way to the individual citizen’s smart mobile phone so as to able to transact his/her needs & requirements. Thus, there is no reason whatsoever to not being able to demand & supply needs like food, water, clothes, education, shelter, judiciary, health, transport & a sustainable clean environment by the government. Lastly, a GOI Central Bank (The RBI) need not issue treasury bills and bonds to raise money. All that is required is that the authorized bank officials’ type in the figure of monies required to both demanders and suppliers in a fraudless manner via the existing transparent electronic platforms….it is as simple as that!! However, the Banks and other government personnel will have to enforce supply of goods, products & services. So the ITO & others will convert into the EDSO (Enforcement Directorate of Supply Officer)….no displacement of personnel.

There is nothing Made in the World that cannot be made in India except the availability of crude petroleum that would have to be imported given our current usage. However, because of the impact on the environment I do not think crude petroleum is the right choice especially due to our sub standard emissions numbers. One could argue “Swaraj” pretty competently, but then with money as a potential given in our PODS markets/economy, we could also invite selected technologies from all over the world, give the technologists visas or citizenship, INR lines of credit, no taxes, power, land, permissions & personnel. For all you know the techies could be PIOs or NRIs who could and maybe should answer this clarion call not with FDI but with selected technologies that they have patented overseas. There is a case for taxing the PIOs & NRIs in case we run short of hard currencies which could be returned in INR at a future date while paying 10% interest electronically but not before arbitrarily fixing the FX rate for the next 25 years with the basket of currencies that the INR is pegged to.

Given the current COVID -19 situation and after seeing USA & the UK (and so many developed economies also) announcing a $2.2 trillion & 330 billion pounds stimulus and support package for their respective economies India should take the cue and announce a INR 165 trillion (adjust for PPP) package for all the daily wage workers, farmers, SMEs as well as large businesses, but remember the EDSOs will have to perform on the supply side. Lastly, note that the Swiss spend approximately $ 66000/- as per capita income and India spends $ 8500/- as per capita income ( this comes to using PPP system of comparison 8500/- X 1.3 billion citizens = $ 11.050 trillion). If Prime Minister Modi wants his way then he would like to spend 15 lacs or $ 20000/- (Given the current FX rate & using PPP method also this would be $ 26 trillion) then what he wants to do is just increasing our numbers by 235% over current levels but which is doable in a manner described here. $20000/- per capita translates to INR 1950 trillion. which is also achievable depending on how fast we can build up the supply side to this level. Our population of 1.3 billion citizens entitles us to be ambitious and PODS can show the way to be so. It is to be noted that PODS is universally applicable also.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


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Vidur Raj

The author is Self taught & thought intellectual academic, in out of the box macroeconomic policy, since 1984-85. His website is www.omdic.com

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