The Aam Aadmi party (AAP), if it’s mandate is getting rid of corruption in the country, should ban the word “Free” from the lexicon of the economy. “Free” is corruption of the common man and is the root cause of corruption in India and globally. “Free” makes an economy and its people uncompetitive leading to long term decline of a country and its economy.
Why is “Free” a four letter word? Take for example an oil rich nation that depends wholly on its “Free” wealth. The wealth generated by oil leads to the corruption of its people if not used constructively. The people are fed, clothed and provided for by the state but over and above that there is absolutely no involvement in providing top of the class education, making the economy a vibrant and free market one where innovation and entrepreneurship thrive. The result is an economy full of dissatisfied population who are unskilled in the eyes of the world. The economy is riddled with unemployment, inflation and corruption. Countries in the Middle East, Africa, South America and Eastern Europe are examples where “Free” has corrupted the nations.
India fortunately is not rich in oil and that has led to the economy becoming more and more self dependent. However the country is clearly in danger of losing its competitiveness in the world economy given the word “Free”. In fact “Free” has led to the Indian Rupee falling by over 40% in a two year period to touch all time lows in 2013.
The word “Free” in India comes with a huge price. In the name of Aam Aadmi, politicians dole out money in the form of food, water, electricity, jobs, and laptops, TVs, Cooking Gas and various other “Freebies”. The end result is a population dependent on free doles by a government that has run out of money to continue providing “Freebies”.
The NREGA (National Rural Employment Guarantee Act) has take workers out of agricultural fields to liquor bars. The result is high cost of unskilled agricultural labor that is leading to food prices skyrocketing in the economy.
The corruption and wastage of resources from the word “Free” is huge. The endless bureaucracy in the “Free” world has led to massive corruption scams right from NREGA payouts to distribution of food, electricity and water. The AAP while doling out free water in Delhi should have a rider along with it to check wastage and diversion. Similarly cheaper power should have riders of standardized meters and prevention of theft. AAP should remove corruption by stopping all things “Free”.
Government jobs are seen as a lifetime employment. Once a person enters a government workforce, he or she is guaranteed of staying in employment irrespective of the performance. This is the reason for poor productivity and financial performance standards of public sector units (PSUs). Freedom from work is the mantra of a majority of government employees in the country.
“Free” does not stop at the political level. In financial services, free advice, tips, guaranteed high returns, risk free trading profits and other such free but not free services causes huge losses to investors. Tax Free bonds that are allowed for issuance by corporates in the name of infrastructure corrupt the whole interest rate and credit curve. Tax Free issuers actually borrow at lower yields than the government, skewing the credit curve. The savings in cost by the issuers of tax free bonds is just around 70bps to 100bps, which is hardly worth the damage it causes to the fixed income market.
“Free” never ends in India. Right from free passes to just about any entertainment that is happening in the country to free rides and free merchandize, the word “Free” abounds. Unfortunately the cost of “Free” is not taken into account by both the giver and the receiver leading to heartburns all around when the true payment time arrives.
It is high time everything “Free” stops in the economy for the country to become productive and competitive in the long run.