The government must initiate immediate measures to curb the Inspector Raj with a firm hand. A lower tax regime will enable larger collections and compliance. At present nearly 78% of taxes are paid by the Industrial sector alone. This makes it imperative to spread the tax burden evenly over the entire economy. There is possibility of raising significant revenue from services. The government and the private sector must become equal partners in the development process. There must be no further delay in the disinvestments process so that additional funds can be raised to boost economic growth. There is a distinct deficiency of demand led growth. It is learnt that an estimated Rs.50,000 crores is lying unutilized by different government ministries.

17 out of 28 states are near bankrupt. Maharashtra is one of them. The question is whether the money is there. Earlier even in fiscal crisis, expenditure was undertaken. Is it that the government machinery has collapsed, or there is no money. The finance ministry is clueless. Everyone is clueless. The center and the state must also collaborate to draw up a national agenda to spur demand in all sectors. The government is feeling the pinch of the cash crunch. It has therefore resorted to indiscriminate tax search and seizures and is trying to grab money.

On the other hand, it is feasible to bring down taxes to 20% and declare new disclosure laws so that black money generation and evasion is wiped out. In addition, the business sentiment must be improved through innovative policies to encourage investment. Further, lowering of the tax burden will improve consumer spending. Reducing taxes will bring more money for investment and productive activities. Incentives can be considered for investment in industrial growth. Another alternative can be to reduce taxes and do away with incentives. An excise cut from 16% to 10% or even below to 5% will benefit an estimated 100 crore consumers and result in consumer demand for cheaper and more affordable goods. It is necessary to create optimism and demand for consumption led growth. There must be immediate implementation of a uniform value added tax. Hard decisions are called for in hard times. We must chose between tax cuts or investments. In trying to find the golden mean, India must let the world know that it is in a better position than most developing countries to become a global player. Modern management practices have enabled Indian companies to do well. India has the largest pool of trained and technical manpower. Inflation and the exchange rate are stable.

Diplomatic and trade mission must launch a massive media blitz and road shows to attract global attention that India is still the most attractive investment destination. Indian industry and trade must brace themselves to move out of the transition phase even as the economy is restructured through second-generation reforms to remove the gloom and crisis of confidence. The perceived change in mindset must percolate to all levels and embrace all sectors The experience of other country shows that during the great depression, expenditure was stepped up to build infrastructure and provide housing. Spot decisions are required to remove bottlenecks in investments. The moot factor is implementation, leadership and structural adjustments. Internationally, tax rates in India are comparable and not so bad. There is the distinct possibility of improved economic growth, which in the long term will have a positive impact on the fiscal deficit. The fiscal deficit can also be pruned by reducing non-plan expenditure and downsizing. It is essential that there is a feel good factor.

Politics must be in full command of the economy. No economist has complained of the government inertia. There is a feeling of despondency and hopelessness. These economists must influence public opinion and prevent the government from misbehaving. Think tanks worldwide influence public opinion and point out how to get the government to take the right steps. All government appointed committees are in a sense nationalized and there is no independent thinking to reach the people. It is essential to educate public opinion to influence politicians.