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Before we move on with this episode of The Scene in the Unseen, do check out another
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awesome podcast from IVM Podcast, Cyrus Says, hosted by my old buddy Cyrus Brocha.
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India has two national obsessions, cricket and popular cinema. But there comes a time
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every year when it seems like there's a third obsession, the budget. There used to be a
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time when only people who cared about economics cared about the budget. Wonks would write
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opinion pieces for other wonks. But that has changed, as the budget has become a part of
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popular culture. These days, the day before it's out, your city supplements will have
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stories where 40 minor film stars and celebrities are asked what they would like from the budget,
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as if they understand any of the nuances. Ask your average celeb if there is such a
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thing as an average celeb, what he thinks of the fiscal deficit. And he'll probably
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say, I didn't go to the gym for three weeks, I had a fiscal deficit. But dad jokes apart,
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it seems to me that the budget should both matter and not matter to every citizen of
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this country. On the one hand, it should not matter too much because it betrays a central
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planning mindset. Our economy basically runs on its own, like all economies, in spite of
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the state. Although the state can and does do great damage to it, the state's only legit
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role is to be an enabler, to maintain the rule of law and to make sure it doesn't use
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its monopoly on violence to place obstacles to free enterprise. Of course, in practice,
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in India, the rule of law is basically absent and obstacles are ever present all around us.
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That said, even in a perfect world, the budget would be something that every citizen of a
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democracy should care deeply about. After all, it's an account of what the state is
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doing with our money. We need to keep it accountable at all times, eternal vigilance.
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And the budget is one tool that increases transparency and hopefully accountability.
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It might be a damn boring document, but we all need to pay attention to the budget.
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Welcome to The Scene and the Unseen. My guest for today is India's most popular economics
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writer Vivek Kaul, a frequent guest on the show and a good friend of mine. Vivek follows
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a budget like some people follow Game of Thrones. You could say he's a budget fanboy. He loves
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diving into the world of numbers. But unlike others of such strange inclinations, he actually
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does something quite useful after absorbing these numbers. He explains it to others in a way
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that everyone can understand. This is a rare public service and I'm sure you're very moved
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already at the sacrifice this involves. Vivek takes one for the team. But before I begin
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my conversation with him, let's take a quick commercial break.
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This episode of The Scene and the Unseen is brought to you by Storytel. Storytel is an
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I actually use Storytel myself regularly. So as long as I sponsor the show,
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I'm going to recommend one book a week that I love. The book I want to recommend today is by
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one of India's most popular and loved writers, Ruskin Bond. It's called Friends in Wild Places,
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Birds, Beasts and Other Companions. And remember, you get a 30-day free trial
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only at Storytel.com slash IVM. Welcome to The Scene and the Unseen, Vivek.
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So the day the budget came out and I'm sure the ratings of Mirror Now went up massively because
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you were all day on Mirror Now. What's kind of the experience like being like a TV pandit then?
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I mean, if I were to be very honest, I don't like being on TV.
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And this is for the simple reason because most of the times, you know, nuance goes out of the window.
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And you have to, and even if nuance goes out of the window in that, I'm still fine with.
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But sometimes you have to answer questions which you have no clue of because, you know, once the
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anchor has put a question across to you, I mean, you can't say, I don't know, on live TV.
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So you have to either answer that question or, you know, you have to do what we all used to do,
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you know, when we used to write exams in school, wherein, you know, no, not wing it,
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wherein even if, you know, the question can be anything, you write what you know.
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So that you fill up that space. So which is typically, you know, if you watch TV carefully
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and especially when they talk about economics, it happens quite a lot because, you know,
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because the anchor is trying to dump it down to a level where everyone and anyone
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understands what is happening. But sometimes the questions asked
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are such that it's simply not possible to sort of get it down to that level.
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I remember way back in the last decade, when I was an active blogger, I used to get called
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to be a talking head and all of these TV shows. So I've been on We The People,
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I've been on Annab show before Annab became Annab. And the interesting strategy there is that you
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basically get time to say one or two sentences. You go there, what all the regular guests use is
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you go there prepared with your one or two lines.
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And then you, so which is, see, which is what happens typically. So you basically,
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you know, have, let's say, you know, when you go there, you have four to five points listed out.
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And then you, you know, say those points when your opportunity comes, the problem
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comes when they expect you to answer something you have no clue of. So like one day what happened
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was I was, I was there for a discussion on some topic, you know, dealing with, I think economics.
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And Mamata Banerjee suddenly started having a press conference. Now what happens is typically
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that, you know, the way an anchor works is he or she bounces off, you know, questions or ideas with
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someone who is present with him or her in the studio. So I happened to be the only one in the
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studio with the anchor at that point of time. So I was expected to have a view on West Bengal as well
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and the politics of West Bengal. So those situations can be, you know, politics is easy.
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You know, we all have an opinion, but it's not something that, you know, I'm really comfortable
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with. So no. And the interesting thing is that if you get pushed into a situation where you have to
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wing it and give an opinion, then because you've given the opinion, you start rationalizing the
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opinion and eventually actually, which is what happened, you know, when I was a part of the
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election coverage on TV and that happened, you know, because, you know, initially I'd said a
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few things and then I needed evidence to back that up. And then I started rationalizing it.
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And then I started believing it. This is the birth of political ideology right here.
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And yeah, I mean, so that, that TV does that to you. And the funny thing is I could see it happening.
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It wasn't like I didn't realize what was happening when I'm, but. So like the homunculus,
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the Vivek call inside Vivek call is looking down at Vivek call doing all these things.
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Yeah. So in the, in this episode, we're basically going to discuss the budget and we're going to
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discuss the state of the economy as it is. And we went on Twitter and Facebook and asked people to
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give in questions. And I think there are 143 questions we were going to pick. Yeah. But it
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felt like 143 and no doubt as we are recording this, the number is 143 a prime number. Yeah.
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Moment of silence. Don't edit the silence out. I want all my listeners to know my
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ignorance on this question. Let's just be honest here. So we'll get to those questions at the end
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of this episode, but I have to tell you that I also received three questions by postcard.
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So I'm going to take you through those questions now. No, no, really from postcard from a long
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way away. So the first of those questions, one of them is for me, but two are for you. So
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I'll space them out through the episode. First question. Dear Vivek, I must tell you how much
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I admire your deep insights on economics and your voice. I love listening to your voice.
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Whenever there is too much stress at work, I put on my headphones and play one of your old episodes
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with Amit and I immediately feel at ease. I really wish you were here with me now. It is so hard to
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run a ministry on my own. This letter is from Nirmala S in Delhi. So a secret. We are all going
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to go to Arthur road soon. What is Arthur road? There's a jail there, a big one. Okay. I mean,
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I'll, I'll, I'll, I'll come and visit whoever, whichever one of my friends is. I mean, you will
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also know because I haven't done anything. I just happened to be here. What do you mean? I just
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happened to be here. Did you see what happened to Hardik Pandya and KL Rahul? What did KL Rahul say
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that was wrong? He was just there. He just happened to be there. So watch out Vivek. So let's, let's
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getting back to an equally serious issue of, of the budget in general. You know, you've been
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covering economics, I think for almost 15 years now as a writer on the subject. Did you follow
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the budget before that? Like when did you first kind of get interested in the budget? So the first
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budget, I actually sort of was an active part of the budget in 2006. And I happened to be working
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for a newspaper called DNA back then. And, you know, this was an era in which newspapers had
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started taking, you know, a lot of interest in the budget. And the idea was to sort of obviously
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dumb it down and make everyone interested. And so there was a lot of pre-packaged stuff that
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went into the newspaper. And I think that was the first budget that I really, I mean, I was
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just well and truly a part of. But before that, you know, I did write on the budget without really
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being a part of, you know, any, any media house or something. Yeah. And how much does the budget
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really matter? Because okay, the government says that these are the revenues that are going to
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come in. This is what we are going to do with it, which is basically that's a summary of what it is.
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But they don't actually end up necessarily getting those revenues, which they forecast
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not doing the things that they promised to do. Yes, which is true. And I think, see, it's like
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any budgeting exercise. You know, when you start, you need a certain direction, right? Now, whether
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that, you know, whether the way you've budgeted or whether the, you know, whatever you want to
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achieve during the course of the year happens or not is another thing altogether. But, you know,
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everything needs a starting point. And as far as no starting points go, the budget is, it is
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important. Having said that, it's not the only thing. I mean, you know, if, if you like, and I'll
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give you a very, very simple example. Like in the last year's budget, the government set a certain
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target, which they wanted to achieve on the goods and services tax front. So basically, you know,
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goods and services tax is collected by the central government, and then it's divided
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between the central government and the state governments. Okay. So the central government
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hoped to earn around 6.04 lakh crore through the central GST. By the, you know, by the time six,
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seven months had gone down, it was very clear that they would not be able to earn that kind of money.
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Okay. Now what they did was that when the next budget was presented, which was in February, which
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was the, which was an interim budget this time, they revised the number lower to around 5.04 lakh
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crore. So it was a hundred thousand crore lower, but even that lower number was not achievable.
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And a lot of people, including me, wrote that at that point of time. And they finally ended
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up achieving rupees 4.58 lakh crore. Okay. Now the point is that, you know, you had a certain
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target when you sort of came up with the budget, you had an opportunity to revise it. You did
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revise it, but you did not revise it as much as you should have. So, you know, obviously when you
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start, there is a certain target in mind, but as you go along, if that target is not achieved,
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you also have an opportunity to revise it. Now the fact that they chose not to revise it or not to
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revise it as much as they should have is another thing. But, you know, so when, when you start,
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you need to know as to, you know, as long as, you know, if you don't know where your money is
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going to come from, how will you decide how much can you spend? So there's a broader question.
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How much is economics nowadays hostage to politics? For example, the thing is that to get a sense of
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what's happening in the economy, we need good data. Now, clearly that good data is not there.
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The data is essentially whatever data is put out by the government is in question all the time.
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In fact, last week I recorded a great episode on the GDP with the economist Rajeshwari Sengupta,
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which was such a great episode. I wanted to release it immediately, but your fans were
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clamoring for this episode. So we've delayed it by a week. But one of the points that she
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made there was that the whole process is completely opaque now and it just becomes a matter of faith,
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which number you choose to accept. And obviously there are smelly tests of the sort that even you
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have done, which can tell you whether, you know, it smells right or not. But then the thing is when
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all the data, when all the sources of data are so sort of in question and also where the government
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is doing various kinds of Jogar to show itself in a good light, Jogar with the numbers. So that's
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not just in terms of how you define or measure the GDP, which is an opaque system. And that episode
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is out next week. But even for example, how a friend of ours pointed out that, you know,
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how expenditure by the government of last year has been managed, quote unquote managed by not
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releasing funds to the food corporation of India. And FCI for the last three years has been borrowing
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from the national small savings fund so that the government can, you know, put a number in a
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particular light. But this is a sort of a Jogar for the sake of optics. So, I mean, basically,
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you know, you asked three, four questions. So I'll try answering them one by one. As far as data is
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concerned, I think the quality of data or more than the quality, even the quantity and the
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availability of data now in 2019 is much better than it was in 2004, 2003. The second thing is
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that in 2003 or 2004, because the internet was what it was, it was, you know, at least in India,
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it was in a very rudimentary stage. The data was not as easily available as it is now. I mean,
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back then, unless you had physical copies of documents and all, it was a little difficult to
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dig out data. So to that extent, the availability is a lot better now than it used to be back then.
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We also have a lot more data than we used to have back then. As far as the quality of data
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is concerned, I think, you know, we are missing a point here. I don't think there is a doubt about
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all government data. Yes, there is doubt about a few data points here and there. And, you know,
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the biggest of them being the gross domestic product, which is basically a measure of the
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economic size of a country, in this case, India. So the GDP numbers are in doubt. A fiscal deficit
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is a tricky thing. And I mean, since you've raised the food corporation example, so I'll sort of
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explain it in detail. Now, basically, food corporation of India, what does it do? Food
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corporation of India buys rice and wheat, primarily, directly from the farmers at a certain
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price. Now, this price is referred to as a minimum support price and is set every year by the
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government. So the rice is bought, then and the wheat is bought. And then this rice and wheat
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is sold to the public distribution system at a very low price. Now, you know, public distribution
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system are, you know, we've all commonly seen the ration shops, you know, all across the country.
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So in fact, there used to be a guzzle by Jagjit Singh.
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Could be the anthem of the food corporation of India.
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So basically, you know, let's say, I mean, I'm just giving you, I mean, I don't remember exact
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numbers, but let's say they sort of buy rice at 15, 16 rupees per kg, they sell it at two,
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three rupees per kg. So the government needs to make good of this. The subsidy basically,
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this is a subsidy. This is so the government makes good of this under recovery through food
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subsidies allocated in the budget. The problem is that the amount allocated towards the food
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subsidies are never really enough to sort of compensate food corporation of India. Or what
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happens is like, you know, what happened last year was that the revenues that the government
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expected to earn did not really come in. So the amount allocated towards food subsidy was around
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1.7 lakh crore. And the final number which went towards food subsidy was around 1.01 lakh crore
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or something like that. So they're borrowing the rest. No. So basically, what is happening is here
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is that the so to that extent, FCI wasn't paid around, let's say 70,000 crore. Okay. Now,
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so there are two things here. One is that the government works on cash accounting,
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not like companies work on accrual government works on cash. Now, what does this mean? This
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basically means that it doesn't matter in case of the government, whether an expenditure is due
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or not, whether an expenditure is due. If, unless it has been paid for, I mean, unless money has left
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the accounts of the government, the, that is not counted as expenditure. Okay. So even though you
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need to pay, let's say 70,000 crore more to food corporation of India, the fact that you haven't,
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it basically means that expenditure has not been incurred. And also what that then means is that
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your fiscal deficit number, which is what I'm saying. So because the government expenditure
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hasn't happened, so your fiscal deficit number ends up looking much better. Now on the flip side,
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FCI needs to go out and borrow that money because it needs to continue to be in operation. It's a
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going concern, right? Now, why does anyone lend to FCI? They lend to FCI because FCI is an entity of
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the government of India and governments typically do not default. Okay. So even though that lending
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ends up showing on the books of the food corporation of India, it is basically money that is being lent
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to the government of India. Now, over the years, what has happened is, I mean, I did some rough
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calculation, you know, some time back, I think the total amount of money that is due to FCI as of
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March 31st, 2019 comes to around 1,60,000 crore. So this is not happened over a period of one year.
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It has been happening for at least, you know, the last eight, nine years. It started under P. Chidambaram
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when he was the finance minister. And because of that, that number is ballooned. Now it's ballooned
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to a level where it's become uncontrollable. Now, other than what is also happening is that, you know,
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FCI, other than borrowing from the market, it is borrowing from something called as the National
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Small Savings Fund. Now, the money that we all put in the public provident fund and all the,
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you know, different investment schemes run by the post office goes into the NSSF, National Small
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Savings Fund. So FCI is now borrowing from that fund as well. So, which is not, there's one
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government entity borrowing from another government entity because the government hasn't paid it the
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money to make its fiscal deficit figures and the taxpayers are on both sides of the equation.
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Of course. So the other interesting thing that also is happening and it's been happening for
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a long time is one government company buying another government company and paying the
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government for it. And calling it privatization. Not privatization, calling it disinvestment.
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They call it strategic disinvestment. So last year you had ONGC buying HPCL
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for some 36, 37,000 crore. So that money went from the coffers of ONGC and it went to the
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government and ONGC now owns HPCL. In order to execute this deal, ONGC had to borrow 18,000
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crores. Now, obviously ONGC is borrowing here. So, but this borrowing should actually be on
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the books of the government, not on the books of ONGC. So this is another way the government
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sort of works towards bringing down its fiscal deficit. So I think there's another deal which
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happened, I think this year. So basically ONGC will borrow, they'll pay the government and the
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government will present it as revenues and it'll look good in the fiscal deficit. So it's like,
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you know, it's basically a long time and I don't know if this is the good, it's a good example.
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When the Enron fraud in the US, at the heart of it, what was happening was Enron was making
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subsidiaries. The subsidiaries were borrowing money and that borrowed money ended up through
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various shenanigans, ended up as revenue on the books of Enron. So this is a similar operation
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where ONGC borrows money and buys HPCL, gives that money to the government. So the money that
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ONGC is borrowed ends up as revenue on the books of the government. And yeah, and that's how.
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Except in the corporate world, when Enron does it, you call it fraud, but here it is
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statecraft and financial management. I mean, yeah, I mean, we can't call it fraud, but yeah,
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it's not. Yeah. I mean, it's, it's basically a Jugaar meant to fool people. So see basically
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what happens here is, you know, and this is an exercise which can go on for eternity, right?
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Now ONGC bought HPCL, then someone else can buy ONGC, then someone else can buy that.
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Yeah. And ultimately it's taxpayers money and our children suffer, though none of us have children.
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So which is why we don't, which is why we don't. Well, we are actually the only people who give
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shit about this. It is none that we know of. Speak for yourself. Right. So now let's, let's,
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actually it's a good time to come to another letter, which I received by postcard,
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which is again a letter for you. So now the context for this letter is that for the newspaper mint,
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you've done this lovely full page thing where you created a snakes and ladders board
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and explained the budget through the snakes in the ladder. It was not the budget. It was
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actually the five trillion, the five trillion. Yeah. Cool. Which I will ask you more questions
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about later. Or maybe why not right after this? And so the letter regards, right? Dear Vivek,
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after the budget came out, I noted that you did a snakes and ladder feature for a local newspaper.
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It was very creative and I must commend you. However, I would like to let you know that I own
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all the snakes and ladders in this country. So kindly be careful the next time you try a
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stunt like this. This letter is from Amit S in Delhi. So I won't ask you to respond to this
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because it's not a question. It's fan mail. So it doesn't fit into the AMA sort of thing. But
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no, one of the things that I mean, uh, and I of course retweeted your tweet on that snakes and
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ladder thing. And one of the delightful things about it was that you sort of made something,
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which was very complex, very explicable and fun. And you did the same thing in a column you wrote
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about the budget where you brought in Basanti, Veeru, Gabbar and Jay. Kindly explain the
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connection of Sholey to the budget. So when, when I had to sort of write this piece, uh, you know,
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I had sort of figured out what I wanted to write. Uh, and, uh, but I needed an opening with sort of,
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uh, uh, curated some, you know, reader interest and also made me sort of a little more excited
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about writing the piece. So the basic idea was to sort of, you know, whenever I'm in doubt,
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I sort of go back to seventies, eighties, Hindi cinema. So the basic idea was that, you know,
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you have the hero and the heroine's family, which has been captured by the villain. And, uh, you
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know, they are at his den. And then, uh, after some point, you know, you have this, you know,
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you have a hero breaking in, uh, throw a wall on a motorcycle, you know, when he comes to rescue
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all of them. So this was the basic idea. This was what I originally wanted to write. And then it
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sort of occurred to me that, you know, why sort of, uh, use a general example when you can use a specific
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one. So the specific example was Sholay, where Basanti, uh, you know, Basanti and Veeru are at
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Gabbar's den. And, uh, Basanti is essentially being told very clearly by, uh, any chewing
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Gabbar that, you know, as long as you dance, your boyfriend shall live. And, uh, Veeru cannot do
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anything because his hands are tied. Right. So when you, when you're watching this as an audience,
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you obviously, uh, are a little worried, right? But at the back of, because you have seen as many
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Hindi films as you have, I mean, you know, that someone will come to the rescue. And in this case,
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you know that Veeru's friend Jai, who's not there, will come and sort of rescue them. So this was the
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basic idea of what I wanted to write. So obviously what was the connection with the, with the economy
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and with the budget and now, so if you look at the budget, there is obviously the revenue side
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with what the government hopes to earn and the expenditure side on what it wants to spend its
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money on. If you look at the revenue side, the five biggest taxes, uh, you know, this time that
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the government earns money through are basically corporation tax, which is income tax paid by
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companies. Then there is income tax, which you and I pay. Uh, then there is, uh, GST goods and
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services tax, which we pay on a whole host of things we consume. I mean, starting from the food
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that we eat at restaurants, so on and so forth. Then there is union exercise duty, and then there
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is customs duty. Okay. Now these are the five main taxes. If you look at the targets for this
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financial year, the government hopes to earn 20% more than what they had earned during the last
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financial year. This is the overall taxes. If you adjust the overall taxes for, uh, what the
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central government shares with the state governments, what remains, uh, you know, are referred to as
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revenue receipts. And those revenue receipts are expected to grow 25% this year. Now 20% growth
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and 25% growth in government revenues is, uh, if I wouldn't call it impossible is very, very
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difficult. Okay. Now, why do I say that you have an economy, which the government expects to grow
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by around 12%. This is a nominal terms without adjusting for inflation. Now, when the economy
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is growing by 12%, you know, expecting taxes to grow by 20 or 25% is a calculation, which does not
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work. Okay. But you know, again, so how, how, how does the government balance this out? Okay.
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They balance this out by expecting the reserve bank of India to give them a huge dividend. Okay.
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Now, how is all this sort of linked with, you know, Gabbar, Basanti and Sholay and whatnot.
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So obviously, you know, in, in this, uh, situation, uh, you know, you have Basanti and, uh, you have
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Viru, right? So they're basically like the economy and the government. Okay. And, uh, or you can even
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call them the budget, whatever. Now they need to be rescued. Uh, and who will rescue them? The RBI
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will rescue them. So the RBI becomes Jay. Right. So you have Jay, Viru and you know, you have Gabbar
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and you have Basanti. Okay. Now how will the RBI rescue the government? The RBI, so basically,
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you know, the RBI, uh, makes a profit every year from its operations. How does RBI make a profit?
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Now, uh, what is the liability of the RBI? The liability of the RBI is the paper money that it
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prints and puts out into the market. The assets are the international bonds or, you know, the bonds
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that it owns. Now, what happens is that the RBI earns interest on its assets, but it does not pay
#
any interest on its liabilities. So it ends up making a humongous amount of profit every year.
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A lot of, so what happens is a significant share of this profit is shared with the government as a
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dividend every year and whatever remains goes into the capital of the RBI. Okay. And so this has been
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happening for many years and RBI has ended up accumulating a certain amount of capital. Now,
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this is a fairly technical issue. And, uh, I mean, even my understanding of this doesn't go, you
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know, beyond the fact that the RBI has ended up accumulating a lot of capital. So, uh, you know,
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a few years back, uh, Arvind Subramaniam, who happened to be the chief economic advisor of the
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ministry of finance, uh, wrote in the economic survey that, uh, you know, a significant portion
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of this accumulated capital that the RBI has can be shared with the government of India.
#
Since then, there has been a lot of, uh, back and forth. Anybody and everybody who has worked for
#
the RBI does not like the idea of handing over this money to the government because what they
#
are saying is that, uh, all this capital on our books essentially gives us a rock solid balance
#
sheet and it helps us any point of time where there is any international financial crisis,
#
which can spread to India. The government on the other hand, uh, wants this money and it's
#
desperate for money, uh, this time around. Uh, so there is a committee which was set up under former
#
RBI governor Bimal Jalan, uh, which has not arrived at a decision as yet. And I think the news
#
going around is that they are likely to sort of submit a report sometime in this month. And, uh,
#
what they are essentially saying is that this capital should be shared with the government
#
over a period of time. And that sort of makes a lot of sense. The government wants it all at once,
#
because, uh, they know that, uh, you know, one is that the tax targets are highly optimistic and
#
there is no way they're going to go around, uh, you know, earning that kind of money. So this time
#
around, I think the, the, the total amount of money that the government expects as an RBI dividend
#
is around 90,000 crore. So last year the RBI had given them, first given them a dividend of 40,000
#
crore, and then it had given an interim dividend of 28,000 crore. So this 90,000 crore is what has
#
been budgeted for. So in case the revenues don't come through, which is, uh, which is a given,
#
I mean, you, you don't, revenues don't jump by 25% year on year. Uh, so if that happens, then
#
they'll need more money from the RBI. So let me, let me kind of summarize my understanding,
#
because this also speaks understanding of this RBI issue, because this also speaks to
#
a larger conflict that's been brewing over the years, uh, which a lot of people have heard about,
#
but may not understand so well. Basically it's understood that in a democracy, you need certain
#
institutions which have a certain amount of autonomy from the government. Typically the
#
central bank and RKZ RBI is supposed to be one of those institutions. The whole idea of having
#
this cash buffer independent from the government and in the RBI's hand is like you said, in case
#
there are financial emergencies or whatever, then the RBI can use it responsibly. And it's
#
important for the financial system that the RBI retains its accountability and retains its
#
independence over decisions like these. Now what has happened over the last few years is that there
#
has been pushback from the government, which has been struggling with its own fiscal imperatives
#
to say, give us the money and everyone from the RBI. And this was, uh, you know, one of the core
#
issues over which, um, you know, Rajan fought, uh, Urjit Patel fought, uh, Vidyalacharya fought,
#
where they were saying that, no, you know, this might be good for the government. It's not good
#
for the country because we need to keep that money in reserve for the RBI. And eventually what has
#
happened is all those guys are gone and Shakti Kanta Das, who was a bureaucrat, uh, who
#
enthusiastically carried out and defended demonetization and who will basically do the
#
government's bidding, is now the governor of the RBI. So the government actually has its own man
#
running the RBI, which is not a desirable strategy.
#
Yeah, see, the bureaucrat part is, you know, if you look at some of the best RBI governors,
#
I mean, everyone from Bimal Jalan to, uh, Dr. YB Reddy, who are very, very highly respected,
#
they were also all bureaucrats. They were financial secretaries.
#
This gentleman has a slightly spotty record because of his role during demonetization.
#
Whatever. I mean, so what I'm trying to say is that it's not just, you know,
#
because someone is a bureaucrat, he or she cannot make for a good RBI governor.
#
But yes, I mean, your point is well taken. So, okay. So the other thing is, you know,
#
what, what happens is, uh, so this is, again, you know, this is some, you know,
#
a lot of economics is simple, but this is not, I mean, this is quite, uh, convoluted.
#
I mean, even though, even though the philosophical question at the heart of this,
#
that should the RBI actually keep this money and not make it available to the government?
#
If so, how much should they give is I think too deeply complicated.
#
It's too complex. No, which is true, but there are simple points that one can make.
#
So, you know, let's say the RBI gives the government a humongous dividend this year.
#
What happens next year? Where is the government going to get money from?
#
Because government expenditure never really comes down. It only goes up.
#
So where is that money going to come from next year? I mean, after you've taken money from the RBI.
#
The, the second thing is, so, you know, how will the RBI hand you the money?
#
Will the RBI hand this money to the government? It has to print this money
#
and hand it over to the government. Okay. Now, obviously the simple explanation here is that,
#
you know, when the RBI prints money and hands it over to the government,
#
the money supply will go up and then inflation will happen.
#
Now, this is not always true because what the RBI can also do at the same time is that,
#
you know, while it can hand over printed money to the government,
#
it can also suck money out of the market. You know, the same amount of money can be
#
sucked out of the market by selling bonds, right? So, so that is, you know, there is this point
#
to it as well. But, but largely, you know, the point here is that, you know, what will the
#
government do in the years to come? Because, you know, if it has to take such a huge amount of
#
money from the reserve bank to keep itself going, I mean, then there is a basic problem with our
#
our fiscal maths. I mean, our expenditures, our revenues don't justify our expenditures.
#
And like you pointed out in your excellent piece, which will be linked from the show notes,
#
it's important to remember that in Sholay, Jai did come to the rescue, but he died.
#
He died. So, yeah. So, which is the last point here in on, you know, that,
#
I mean, even though we didn't want him to die, but yeah, he, he did die.
#
So, and the irony that Basanti was played by a now BJP MP,
#
which is, no, I mean, and Viru was also a former BJP MP. So, there you go. So,
#
and Jai was a former, is a former Congress MP. So, this is confusing shit out of me.
#
I guess, but basically, Amitabh Bachchan was a Congress MP from Allahabad. Very, very,
#
yeah. But now, now, Gabbar probably never fought elections. Gabbar was a good guy.
#
And, and, and, and even Jaya Prada, what was her role? What was she called in the movie?
#
She was, she's also a member of parliament. So, there you go. Everyone who acted in Sholay,
#
you know, ended up in parliament at some point of time. Oh, this is something I never realized.
#
What is the lesson that we can draw from this Vivek? That we should have worked in.
#
Yeah. You are only written about Sholay and you're nowhere near parliament. Of course,
#
if these postcards are true, they do want you to help them run ministries. But what's happening
#
here is in the government's thirst for revenue, it is not only, you know, looking to the RBI to
#
help in the way that you just described, but it's also increasing taxes. Like Andy Mukherjee wrote
#
a piece on Bloomberg, which has a great headline, which is the headline is, if it moves, tax it.
#
That's desperate India. And in fact, I'll quote from Andy. I guess Andy can do that. He lives
#
in Singapore. You can't do that. Yeah. And I'll quote from that piece and ask for your comment on
#
it, where what he basically says is quote, instead of confronting the sober reality, revamping a
#
flawed GST and taking steps to pull the economy out of a synchronized slowdown in consumption and
#
private investment, bureaucrats are trying to make up the revenue shortfall by taxing everything
#
that moves. Stop quote. Is this short sighted? Yeah, of course. I mean, and you know, this is
#
something I've sort of been writing for a very long time. And I mean, and then I stopped because
#
I mean, after a point, you can't become, you know, I mean, repetitiveness is not good for any
#
any writer. So see the first step towards solving a problem is recognizing that it exists.
#
And, you know, the fact that the Narendra Modi government till date has not recognized that
#
demonetization was a disaster. And we are paying, we're still paying for the, you know, the cost of
#
demonetization. So forget, I mean, let's forget demonetization. Okay. I mean, as a government,
#
if you've done something and it hasn't worked out, you cannot really come out and say, you know,
#
that was a mistake. Point's well taken. But at the same time, you know, you need to recognize
#
that there is a, there is a marked slowdown. The economy is in trouble. And you need to sort of
#
take steps towards, you know, setting that right. And the good part was that this was the first
#
budget of a five year term. The opposition more or less is not there. In fact, you know, one point
#
that I was telling someone the other day was that if you heard the budget speech this time,
#
it was the quietest budget speech that at least I have seen, you know, from whatever I have seen.
#
Normally when a finance minister is speaking, you know, you'll have a cat call, you know,
#
some MP shouting somewhere and in between they'll get noisy. But this time there was just no noise.
#
I mean, the minister stood up and she spoke for two or five minutes, two or 10 minutes,
#
and she wasn't stopped at any point of time. Some would argue that this shows how deeply
#
Indian culture respects women. I don't know. Indian culture doesn't respect women. So
#
well said. I will visit you in Arthur road jail. And you also wrote a piece on income taxes,
#
right? Obviously one of the taxes they've put is they've raised the maximum income tax on,
#
you know, people earning more than two crores, five crores, blah, blah. It's all gone up. You
#
in fact cited, you know, Indira Gandhi in your pieces, you know, I mean, the max rate in her
#
time was 97%. And there's this great story. And I wanted to put that into the piece, but it sort of
#
became too lengthy. So this is from the actor Pran's official biography. And the biography is
#
called and Pran, because I mean, it's obvious all the movies when, which he used to star in,
#
his name used to be in the end and Pran. It's a very good name. As far as biographies go,
#
it's a fantastic name. And it's been written by this gentleman called bunny Rubin, who used to
#
be one of the, he was a big PR guy, original PR guys in Bollywood in the Hindi film industry,
#
not Bollywood. Sorry. So one of the stories in the book is about how Raj Kapoor was almost broke
#
after making Mera Naam Joker. Okay. And he had to sell a part of his studio. And then he decided to
#
make this movie called Bobby or the new generation. And Bobby was supposed to be this low budget,
#
quickie as they call it in, you know, in the film parlance. So obviously Pran sort of, Pran was
#
there in the movie and knowing that, you know, this guy's going through a tough time, he did not
#
charge for the movie. I mean, or so the biography says, and the movie sort of was released and it
#
became a huge hit. So apparently after the movie became a huge hit, Raj Kapoor paid Pran
#
one lakh rupees and Pran was like, iska kya faida? 97,000 toh tax mein hi jaana hai. So the marginal
#
rate of tax in the early seventies was 97.75%. Okay. And I think it was in the budget of 1974-75
#
where Yashwant Raut Sawant, who was then the finance minister, said that something to the
#
effect and I'm paraphrasing here that the high tax rate is essentially leading to, you know,
#
situation where the black economy is getting bigger. So given that we are reducing the tax
#
rate, so the tax rate was reduced from 97.75% to 75%. So anyway, so the point is that India has
#
such a huge black economy primarily because over the years we wanted to tax the high income earners
#
at high tax rates. And the argument is the old one that of social equity where people who earn
#
more should be paying more taxes because they are, you know, blah, blah, blah. Now all this makes
#
immense sense in, you know, or it doesn't make sense. I mean, that is a different argument for
#
a different day. It's a scene. It's not the unseen. I mean, the unseen of high tax rates
#
would really be two things. One is that wherever people who are earning that much are able to
#
leave, they leave. So for example, Singapore has low tax rates. If you're in India and you're
#
earning five crores a year, you just go somewhere where the tax is lower. So it's a flight of labor
#
and it's a brain drain as it were. And the other effect is that a lot of you have a larger black
#
market. And the point is anyone who can do Juga to save taxes. I mean, saving taxes was
#
practically a core skill back in the seventies and eighties. And anyone who can do the Juga
#
to save the taxes, which will be the Ambani's and the Adani's, will do so. And it's, it's
#
so I know. So my, I mean, yes. I mean, I agree with what you're saying, but what, what I wanted
#
to say was that all this makes sense in a country where a significant number of rich people are
#
actually paying taxes. Okay. Now, if you, if you look at the Indian economy and there are numbers
#
for this, it's not like, you know, the, this is true for assessment years, 2017, 18, which is
#
financial year, 16, 17, there were 81,344 people who had a gross total income of more than a
#
crore gross, not even taxable. Okay. 81,344 in a country of 130 crore. And I'd like to assure
#
our listeners that neither Vivek nor I were part of it. I wish nowhere near. So otherwise I wouldn't
#
have been doing this podcast. I would have been relaxing somewhere. So the point is 81,344 people
#
have declared a gross income of more than a crore of this around 51% are the salaried. Poor guys
#
don't have any option. They have to pay tax. Right. So in the budget, you know, people who earn
#
between two crore and five crore. Now I have to pay a tax at the rate of the highest marginal rate
#
is 39%. And the rate is 42.74%. Okay. Now the point is key, you know, and we're talking about
#
81,344 people above a crore. So not even two, no. So the two crore number will probably be one
#
fourth or whatever. I mean, it'll probably be 30,000 or something like that. Right. Not even
#
that. It'll be lower than that. So where are the numbers? You know, you should first look at
#
expanding the tax base rather than, you know, trying to tax the shit out of people who are already
#
there. And like you pointed out, maybe in the extreme short term in the next financial year,
#
you might increase the taxes coming in. But overall it'll not, I mean, it'll any, anyone.
#
See, it's also a matter of effort, right? I mean, when you see that any extra effort leading to any
#
extra income, a bulk of it, if it goes to the government, I mean, why would you want to
#
put in that effort? Right. So that, that part is always true. So I mean, so the thing is, you know,
#
in a country like India, where most people are a large population is still not paying taxes, taxes
#
should remain moderate. I think the 30% top tax rate, which we've been following since 97, 98
#
is perfectly fine. And this just discourages, you know, people from declaring income. Also see,
#
what also happens is that, you know, people who earn a lot of money, like the two crores and the
#
five crores of the world, they don't necessarily make this money through salaried income, right?
#
I mean, a lot of this money is earned through dividend. Tax rates there are lower. A lot of
#
this money is made through capital gains. Tax rates there are lower. So, I mean, ultimately,
#
you know, you are ending up hitting the salaried guy who has no choice. I mean,
#
And the other point I keep making is that, yeah, okay, we need a government to protect our rights.
#
So we need some taxes. And that's fair enough. But if you actually think about it, taxation
#
amounts to part time slavery. For example, what does it mean if you pay 40% of your income every
#
year in tax? It means that for 40% of the year, you are basically working for the government. So
#
from January to April or May or whatever it is, you are working for the government. You start
#
earning after that, which is a situation which, you know, you don't mind doing some slavery for
#
the government, basically part time slavery, as long as you're seeing that the government,
#
the state is doing what it's supposed to do, but there is no rule of law, there is no infrastructure,
#
all the things that the state is supposed to do, it doesn't do. And on top of that,
#
there is this bullshit of having the taxes. Did you see that video of the scooter going into an open
#
storm drain? There you go. You work from Jan to April as a slave for the government. And then
#
your scooter goes into a storm drain and you think, damn it, I'm not coming out. They were able to pull it out.
#
There are four people who saw. You get what I'm saying. So we'll have to go in for a break now and
#
we'll continue after the break. But before that, the final postcard I received, which is for me.
#
Dear Amit, I was very pleased when I read on Twitter that Vivek Kaul was going through
#
a very difficult time to be on your show. I really enjoy the episodes you guys do together.
#
You both have the rare skill of communicating complex ideas in simple language. When I read
#
that Vivek was doing an episode with you, I immediately turned to my other friend called Amit
#
and told him, this letter is from Narendra M in Delhi. We'll come back after a quick commercial
#
break, hopefully. Hey everybody, welcome to another awesome week on the IVM podcast network. If you are
#
not following us on social media, please make sure you do. We're IVM podcasts on Facebook, Twitter,
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and Instagram. Do remember that if you enjoy what you're listening to, take a screenshot,
#
tag us on social media, and we'll repost you on one of the platforms. Also, just, you know, shout
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out if you want to tell us anything about what's going on. Also, a quick reminder, we are still
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hiring. We're hiring in a whole bunch of different areas. If you're looking to work at what I believe
#
is the best place on earth to work at, then you should check out our careers page. That's
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at IVMpodcast.com slash careers. On Cyrus says, journalists and news editor, Maru Kinayat talks
#
to Cyrus about the diminishing opposition in the parliament, her journey from growing up in Kashmir
#
to studying at Harvard, her experience reporting 26 11, and her podcast, The Note with Maru Kinayat.
#
That's on the IVM podcast network. On paperback, Rachita and Satya Cheetah are joined by film
#
critic, Sucharita Tyagi, who discusses the role that film reviews play and the books adapted into
#
films. On Keeping It Queer, Navina Farah talked to the queer affirmative therapist from the Sahas
#
Therapy Group, Advaita and Jagruti about mental health in queer spaces. On the Prakriti podcast,
#
Pawan is joined by Takshashila fellow, Amaya Nayak to talk about the United Nation and its role in
#
global governance. On States of Anarchy, Hamsadi's guest is author, Manu Pillai. They discuss communal
#
relations and the intersection of the foreign and domestic in Indian history. On the Filter
#
Coffee podcast, Karthik is joined by strategy consultant, Mohith Hira. They talk about the
#
evolving brand consumer relationship and how the concept of eddy tales came into being. On IVM
#
Likes, staffers Abba, Sai Sree and our newest producer Shlok are discussing the Indian version
#
of the office. I think you'll enjoy that. On the Habit Coach podcast, Ashwin talks to one of the
#
finest pastry chefs of India, Pooja Dhingra, where they discuss various entrepreneurial habits.
#
On Equity Saiya, Shrey Lungkar, Senior VP and Ashish Somai, CEO at Motilal Oswal AMC, talk to
#
Anupam about the company's investment philosophy, how do you identify stocks and a whole lot more.
#
And with that, let's continue on with your show. Welcome back to The Scene in the Unseen. I'm
#
chatting about the budget with Vivek Kaul and we put out a request for and ask me anything on
#
Twitter and we've been inundated with responses because Vivek Kaul, I have realized in the last
#
18 hours is basically the Shah Rukh Khan of economics. Dude, like you are the Govinda of
#
podcasts, you know, podcaster number one. So just moving on to your questions. And one of the things
#
that you promised your many fans, many, many fans is that you will give autographed copies of your
#
book out to whoever asks the most interesting questions. Because all the questions are
#
interesting and there are so many of them we couldn't possibly. We'll go broke paying courier
#
charges. Yeah. So we've given that, you know, both of us don't come in the 43% tax bracket.
#
Yeah. So we have selected or even lower tax brackets for that matter. You are embarrassed.
#
So, and we have so many questions we won't by the way, be asking all questions. It's not possible.
#
Maybe someday we should just throw a special episode or have a separate podcast where Vivek
#
answers questions, a podcast called Ask Vivek, which would be quite interesting.
#
Use your Vivek to ask Vivek. Yeah. But we're kind of rambling now to get onto the winning question
#
straight away. The winning question is by Somit Mishra who tweets at The Crooked Skull,
#
all one word. And the question is this, quote, this question is not exactly on the budget,
#
but related to economic survey released a day earlier. The document talks a lot about creating
#
a virtuous cycle of investment savings and exports while completely undermining the domestic
#
consumption part. How wise a strategy is it to actually envisage a five trillion economy
#
on the back of exports, especially when there is an uncertain global market with anti-globalization
#
mood across Europe and U.S. And B, the Indian manufacturing sector is yet to show us that it
#
can compete with China. Stop quote. Okay. So, you know, I can see where the economic survey
#
is coming from. And if you look at the history of economic growth and if you look at the history
#
of economic growth over the last 50, 60 years, countries which have gone from being developing
#
countries to becoming developed countries have started with, you know, low end exports,
#
you know, things like toys and agriculture exports and leather exports and so on and so forth. I
#
mean, and this is true across, you know, be it China, be it Southeast Asia, be it Taiwan,
#
even when the U.S. was a developing country and when they exported stuff to the United Kingdom
#
of Great Britain, this is how all development starts. So, to that extent, you know, there is
#
a formula for the entire thing and the economic survey is obviously going with that formula.
#
And you really cannot sort of blame them not to, you know, not to be going with it because,
#
you know, the global market clearly is much, much, much bigger than the Indian market.
#
And you would rather have, you know, some portion of the overall bigger pie, right. Now,
#
to the question of why, you know, Indian manufacturers competing globally, you know,
#
which is true, you know, our exports are not productive enough to be competing globally.
#
And, you know, I mean, we all know examples of how, you know, the Lakshmi and Ganesh,
#
which, you know, who we worship during Diwali, they are also now made in China. We know the
#
example of Holy Colors and Pichkari is being made in China. So, if, you know, we're not able to make
#
even this basic stuff at a good competitive price. The latest example that I've heard of and which
#
is very interesting is that now we are importing agarbattis from Vietnam. And that's primarily
#
because Vietnam grows a lot of bamboo. So, obviously, someone, you know, some industrialists
#
or some entrepreneur from Vietnam has come to India and studied the market and that's how it's
#
all started. The other thing is if you look at our manufacturing firms, and this is very something
#
very peculiar to India, they either employ a bulk of them. I mean, they either employ less than 50
#
people or they employ more than 250 people. There is a huge gap in the middle. Okay. And it's these
#
middle firms who actually create jobs. So, basically, what seems to be happening is that
#
once a firm reaches a certain size, let's say it employs around 40, 45, 47 people, it doesn't want
#
to grow beyond that size. Because, you know, the rules and the regulations that it has to follow
#
once it sort of grows beyond 50 people are so humongous and so problematic that it doesn't
#
make sense for it to go beyond that size. In some cases, 20 people. So, what like typically happens
#
and you and I have been going on about this forever is that where we went wrong in the last few
#
decades is that look, India's advantage if you're looking back 30 years, 40 years was cheap labor.
#
We should have been the manufacturing superpower that China was, but the reason we couldn't do that
#
was because our manufacturing units could never scale. We had bad labor laws, which this
#
incentivized companies scaling beyond a certain point. You know, with some laws, the number is 20
#
that the cost becomes so high if you go past 20 that what companies would do is instead of using
#
the advantages of scale, they would set up separate units and there would be many, many units which
#
have 20, 20 people and therefore not using economies of scale and not being able to scale up and grow
#
to the middle level and from there to the big level, the bigger levels. And this is sort of one
#
of the key reforms that people have been talking about from donkey's ears. This is a labor law,
#
reforms are very, very essential to get the manufacturing sector growing. And this is something
#
that in fact the Modi rhetoric in 2014 actually promised. So, yeah, so I'll just interject here.
#
So, you know, one of the things that Nirmala Sitharaman talked about in the budget was the
#
fact that they are trying to reduce the number of labor laws. So if you look at, you know, India as
#
a whole, the central government has around 44 labor laws and nobody's really sure as to how many
#
labor laws, you know, state governments have. But Amit Mitra, who's now the Minister of Finance in
#
the West Bengal government and used to be a big business lobbyist once upon a time, estimates that
#
the number varies anywhere between 150 to 200. So now what the government has sort of said is that
#
they'll try reducing these laws to basically four codes. Now, this is something that was tried even
#
back in 2015 and, you know, the labor union sort of opposed it and then, you know, that was the
#
last we heard of it. Now, this proposal has been sort of revised and let's see as to how it goes.
#
Now, so getting back to what I was trying to say, you know, one of the things that's happening
#
globally is that China now is sort of moving up the export value chain. So it doesn't want to do
#
low-end exports because the labor now there is expensive and there is no point in China now doing
#
low-end exports. So those exports, so this is something that has been identified. I mean,
#
Arvind Subramaniam wrote quite a lot about it. And so the idea was that because China is not
#
doing this, a lot of this could move to India. But what is happening is that a lot of it is moving
#
to Bangladesh and Vietnam. So we've sort of lost an opportunity there. In fact, if you look at
#
India's low-end exports, our engineering exports have been growing, but our low-end exports,
#
which actually, you know, as I said, create jobs, you know, stuff like leather manufacturing or
#
agri exports and so on and so forth. They have not been growing or they've been growing at a very,
#
very low pace. Now, you know, to say that we are not able to compete and we will not be able to
#
compete is one thing, but what else do you do? I mean, see, consumption is fine, you know,
#
but how does consumption work at the end of the day? I mean, you know, I'll give you a very simple
#
example. Let's say there is an area on the outskirts of a city, a new factory comes and
#
establishes itself there. No factory creates jobs. Housing societies come around the factory. There
#
are shops which open up in and around the factory, grocery shops. You have, you know, everything,
#
from paan walaas to cigarette walaas to sabzi walaas to, so this is how, you know, consumption
#
sort of spreads. Now you have to have something at the heart of it, which encourages that consumption.
#
Okay. So, you know, many years back, I sort of read this great example and, you know, I can't
#
recall where as to how every, a single IT job, a proper IT job in Bangalore created six other jobs
#
around it. Okay. And it's, it's very, it's straightforward because, you know, you need buses to take
#
these IT guys from office and drop them back. Then you need homes to house them. Then you need,
#
these guys have long working hours. So then you need cooks, you need maids, you need so on and so
#
forth. A lot of them go to the U S make money in dollars, come back and spend that money in India.
#
So ultimately for consumption to happen, you know, investment has to happen, you know, consumption
#
cannot keep driving up on its own, unless there is some investment happening somewhere. And if
#
consumption keeps going up on its own, then ultimately you will end up with a huge retail
#
bubble. It's a no-brainer. I mean, look at what has happened in the Western world. What has happened
#
in the Western world is that per capita incomes have stagnated, median incomes have been stagnating
#
since the seventies. Now, obviously, you know, for politicians, the easy way out was to offer loans
#
at low interest rates and then keep the consumption going. So once, and all that sort of added
#
together and came to the financial crisis of 2008. So consumption cannot happen on its own. You
#
know, when people say that India is a consumption driven economy, I think it's a very stupid thing
#
to say. We shouldn't be proud of it. You know, people make statements like 50% of our economy
#
is services. It's not something to be proud of. And in a sense, 50% of our economy being services
#
is actually a reflection of something that's deeply gone wrong. I'll go back to manufacturing
#
for a bit just to sort of illustrate that it's not just about one sector. It's about the whole
#
economy. For example, we know we are in the middle of an agricultural crisis. Now, one of the reasons
#
for the crisis, and I've had various episodes on agriculture, which will be linked from the show
#
notes, but one of the both illustrations and reasons for it is that in India, more than 50%
#
of the people depend on agriculture for a living. While in all developed countries, a number used
#
to be around that much, but now it's much less. For example, in the US, I think it's about 4% in
#
Europe. It's in single figure percentages. We are more than 50%. Now, typically what would happen
#
is that your agricultural productivity would go up and people would move out of agriculture
#
into manufacturing. That's kind of what you would expect, especially in India, where we have the
#
advantage of cheap labor. Now we have a number of laws which tie people to agriculture for various
#
reasons, which again, you can check out in those episodes. And plus at the same time, we have
#
a bunch of laws which constrain manufacturing. So even if people were to be able to get out
#
of agriculture, where are the jobs for them? Where are the manufacturing jobs? And it seems
#
that we might, you know, that boat might well have sailed because with the rise of automation and AI,
#
it's now hard to say that even with, you know, even if these labor laws were to be reformed,
#
would we ever be a manufacturing superpower? That's the question that's there. But see,
#
as chief economic advisor of a country, you really cannot say it's not possible.
#
Of course. I mean, he's got to be positive. So you can't really blame him for
#
saying what he does. I think, see, what has happened is if, you know, if you read the
#
economic surveys of the last 10 years, I think all of them make immense sense.
#
It's just that the politicians are not the ones reading it. I mean, you and I are,
#
that doesn't help. And I just wanted to make another point on, you know, this services being
#
50% of our economy business. And, you know, some of the services, I mean, you look at how big
#
teaching classes are, you know, in Mumbai, we call them teaching classes, right? I mean,
#
why should there be a business like that? I mean, I find it amazing that, you know, students first
#
go to school and college and then go to these classes to attend classes all over again. So
#
what are the teachers doing in school and college? I mean, basically state failure leading to the
#
market having to step in, but it's, I mean, look at how big, I mean, it's not so true anymore,
#
but once upon a time, how big the inverter business used to be in, you know, I mean,
#
inverters are not services, but what I'm saying is that a lot of a lot of state failure is having to
#
be covered up by the market, which is a waste of resources and a waste of energy and entrepreneurship,
#
but you're just having to do it because the state after taking our taxes and making us work free
#
from Jan to April is failing us. So I think so, I mean, I don't know if I've answered the question
#
because we sort of went round and round, but what I'm basically trying to say is that unless
#
there is investment in the economy, how will consumption ever happen beyond a point? Because
#
if consumption is happening and it's growing without investment, I mean, then it's only because
#
the banks and, you know, and the financial institutions are lending money and they're
#
lending money to anyone and everyone. Next question, something more cheerful. This is
#
from Sandeepan Mitra on Twitter who asks, what will be the most appropriate Hindi song to describe
#
the budget? And I insist you sing it. No, I can't sing it. So this is something, I mean,
#
this is not my original thought. I sort of, I saw it on Twitter, a journalist, a Hindustan time
#
journalist called Roshan. And he said, there's this movie called Papa Kehte Hai, which started
#
Jugal Hansraj and someone called Mayuri Kango. And the song was yeh jo thode se hai paise,
#
kharch inko karu mein kaise. So, which is primarily the, you know, something that Ms. Sita Raman was
#
battling with this time around. And doubly poignant given where the careers of Jugal
#
Hansraj and Mayuri Kango went. So in fact, the story, there's this huge story about Jugal Hansraj,
#
the Kuch Kuch Hota Hai song was basically his tune. He gave it to Aditya Chopra, who gave it to
#
Karan Johar. It was his tune. He also made this animated movie called Roadside Roaming,
#
which was very good. The problem was it was marketed for kids. It's just that the humor
#
was for, you know, for, for the, for adults. So that sort of went wrong. Yeah. It was quite nice.
#
We shall now go on to our next question and apologies if I pronounce the name wrong. Shreyas
#
Bantalpad. And this question is NDTV is reporting a hole of 1.7 lakh crores in budget. Is this real?
#
Sounds pretty insane. PS, the crores auto corrected to cries. So a hole of 1.7 lakh cries would also
#
be interesting, but as he points out, it's an appropriate metaphor for where we are economy wise.
#
This is a quite a, it's a complicated thing to sort of, you have a tweet thread on it,
#
which I will link from the show notes. I'll try explaining it. And I also have a piece in
#
the Mint on Thursday, July 11th. We are recording this on July 10th. So basically again, you know,
#
where does this hole come from? There is something in the government budget. There is something known
#
as revenue receipts. Okay. What are revenue receipts? Revenue receipts are essentially
#
taxes that the government earns. You subtract the state government's share from that.
#
And to that, you add the non-tax revenue of the government, which is basically, you know,
#
the dividend that the public sector enterprises give, the dividend that financial institutions,
#
the dividend that RBI gives to the government. So basically you start with the taxes, you know,
#
the five taxes that we, the five major taxes, and then there are these small taxes also.
#
So these five major taxes, from that, you deduct the money that goes to the state governments.
#
And to that, you add the non-tax revenue of the government. So these are revenue receipts
#
to be very, very simple. Now, the, if you look at the economic survey of the government,
#
it puts the revenue receipts at 15.6 lakh crore. Okay. If you look at the budget,
#
it puts the revenue receipts at 17.3 lakh crore. So the question is, where did,
#
you know, the 1.7 lakh crore difference, you know, go? Now, where did that money disappear?
#
I mean, this is how people have been spinning it on Twitter. I mean, the money did not disappear.
#
It's just that the economic survey and the budget use different estimates.
#
The budget use different estimates of the revenue receipts. So basically what happens is
#
when the budget is presented for a year, the government makes estimates of the amount of
#
money it expects to earn and the amount of money it expects to spend. So these estimates
#
are known as budget estimates. Okay. When the next budget is presented, the government again
#
gives a record of the amount of money it expects to earn and the amount of money it expects to
#
spend. So these are revised estimates. Okay. So like let's say 2000, let's, let's take an example
#
of a financial year and do it. So 2018-19, in February, 2018, Arun Jaitley presented the budget
#
and he presented the budget for 18-19, which is the period between April, 2018 and March, 2019.
#
Okay. So what the numbers there were referred to as budget estimates. In February, 2019,
#
Piyush Goyal presented the interim budget. Okay. Now the numbers now for 2018-19 that he has
#
are different from the numbers that Jaitley presented. Right. So these numbers are known as
#
revised estimates. Okay. So the revised estimate in the February, 2019 interim budget for revenue
#
receipts was 17.3 lakh crore. Okay. These are revised estimates. Now what happens, what is
#
peculiar to this year is that we have an interim budget and then we have a final budget. We have
#
an interim budget because the government is completing five years in office and it cannot
#
offer a full year's budget because that is the next government's prerogative. July 5th, Nirmala
#
Sitaraman presents the final budget. Now what has happened is that meanwhile, there is this agency
#
of the government called the controller general of accounts, which puts out a month on month record
#
of, you know, how much the government earns and how much the government spends. So on May 31st,
#
2019, it put out the numbers for 2018-19 and as per that agency, the revenue receipts of the
#
government for 2018-19 were 15.6 lakh crore. Okay. The economic survey used this estimate put out
#
by the controller general of accounts. This is known as a provisional estimate. Okay. So if you
#
have still not, you know, if you're not confused by now, so the economic survey put out the controller
#
general of accounts number, which was 15.6 lakh crore. Nirmala Sitaraman's budget stuck to the
#
revised estimate of 17.3 lakh crore. So now the controller general of accounts number,
#
given that it was published in May is more accurate than the number, which was the revised estimate
#
published in the interim budget. Sitaraman used the revised estimate of 17.3 lakh crore
#
and Subramanyam used the provisional estimate, which is 15.6 lakh crore and hence the difference
#
of 1.7 lakh crore. Now what is happening here? Now, if you look at the previous few times when
#
an interim budget was presented, the last one was in 2014 and the one before that was in 2009.
#
So to put all conspiracy theories to rest, typically when a full budget is presented after
#
an interim budget, the government uses a revised estimate and not a provisional estimate.
#
Now what happened was that this time around the difference between the revised estimate
#
and the provisional estimate was huge. The difference was 1.7 lakh crore. Whereas if you
#
look at, I mean, I looked at the previous two times and the difference between those two estimates
#
was not very big. So because the difference was 1.7 lakh crore, which is why people sort of
#
noticed it. Okay. Now what does this do in the overall scheme of things is very interesting.
#
The revised revenue estimate is 17.3 lakh crore. The next year's revenue receipts are expected to
#
be around 19.6 lakh crore or something like that. But that is a jump of 13%, which is doable.
#
But then the 17.3 lakh crore is not the real number. It's just the number that the government
#
has put into the budget because that's the, you know, that's convention that we follow.
#
So if you put in the real number of 15.63 lakh crore, the revenue receipts now need to
#
jump by 25.6% or something like that. So which is where the problem is. And which is where,
#
if we sort of go back to the RBI point, which is why the government expects the RBI to give a
#
huge dividend. So because you're not accounting for things properly, and this is not, I mean,
#
the Modi government is not to be blamed for this. They are just following what has always been done,
#
but this is something that needs to be corrected because, you know, you can't have, you know,
#
revenue receipts, you want to earn, you know, 25% more, but you're reporting only, you know,
#
13% more. So this is a major hole in the way the budget is sort of crafted. It's just that
#
it never mattered before this. So probably people didn't bother. So this time around,
#
it's a large number and people would have, but there is no conspiracy theory.
#
No one's taken this money out in suitcases. It's not like someone's like run off with the money.
#
It's just that the accounting is different. I have no idea. You would have to ask Harshad Mehta.
#
So, but he's long gone. He was the suitcase man. These days, why do you want to do suitcase? You
#
just do bitcoins now. So that's also true. But if you took it in suitcases, it would give a boost to
#
the suitcase industry. Our manufacturing problems could be solved. I mean, a simplest way would be
#
to do diamonds, but diamonds, the problem is always a valuation. No one gives you the same valuation.
#
Gold is gold. You know, if it is gold, you'll get the rate for that day. No more jokes from me in
#
this episode. You're taking it too seriously. Let's move on to the next question from Sai Krishna
#
Vadlamodi. And I like this question, which is, is it fair for central governments to collect cesses,
#
which they don't have to share with state governments? Doesn't it affect the federal
#
nature of the country? It's a great question. You want to say that? So basically what has happened
#
is that, and this is, you know, in the last two, three years, the government has sort of been
#
imposing more and more cesses. Now what, what is the difference between a cess and a tax? Okay.
#
A tax is basically something we, so let's say there is 20% income tax and then there is a 10%
#
cess on that tax. So which basically translates into a 2% tax. Okay. Now what happens is the,
#
when the union government collects taxes, the taxes need to be shared with these state governments.
#
Whereas when it collects a cess, it doesn't have to share that with the state government. It can
#
keep it for itself, which is why what has been happening is in the last few years is that there
#
have, you know, there has been an increase in the number of cesses. I mean, if you look at,
#
you know, this year also, there was some cess which has been introduced on petrol, one rupee per litre.
#
So what this essentially does is that every time a new cess is introduced, money goes directly into
#
the coffers of the central government. It's not shared with the state government. Now this,
#
I think is wrong primarily because, you know, ultimately the taxes are basically coming from
#
the states, right? I mean, it might be an income tax, but you know, there's nothing like a central
#
area. I mean, right? I mean, there are various states of where people earn and then they pay
#
taxes. So any tax or cess sort of thing has to be, should be shared. So I just did some rough
#
calculation and I think the proportion of cess in the government has increased from some 15-16%
#
close to 30%. So yes, I mean, so this goes against the entire spirit of fiscal federalism and
#
so on and so forth. And you know, so there's another point I wanted to make here is that,
#
so there are a lot of these arguments which, which happened on how, you know, the South pays
#
more tax or like people in Mumbai love to say this, we pay maximum income tax. We shouldn't be saying
#
these things privately because Mumbai pays maximum income tax because the companies are headquartered
#
in Mumbai. The money that they're earning is spread all across India, right? So you cannot really say
#
that, you know, Mumbai is paying, you know, that's just an accounting entry or for that matter,
#
for that matter that Delhi pays the second most tax or for that matter that Bangalore, you know,
#
Karnataka pays a lot of income tax. No, Karnataka pays a lot of income tax because the IT companies
#
happen to be based there and not, which is also a lot of it is a luck of a draw. It's not like,
#
you know, there was infrastructure in Bangalore waiting for IT companies to...
#
I'll also point out the irony here that, you know, when Modiji was a chief minister,
#
he would talk a lot of federalism, like 2014, there was a talk of the town that we'll have
#
increased federalism and blah, blah, blah. But now that the incentives have changed and he's
#
running the central government, where is it in fact? And in fact, very interestingly, you know,
#
the 15th Finance Commission, which is currently on is, if you look some of the things that it's
#
working on, I mean, it goes against the entire idea of federalism. So, and you know, I mean,
#
ultimately, what is the point of a single nation, right? I mean, if the taxes are also not shared,
#
yeah, it's, it's bizarre, right? It's completely bizarre. Moving on now to a question from Umesh
#
Gopinath. And I thought he was being humorous. So therefore I said that I will push for,
#
I will recommend that he get the prize, but he hasn't got the prize. So I'm sorry because,
#
but it's a question worth asking. And I presume he's joking. And the question is,
#
what if there is a bigger story that we are not seeing now? What if it was all planned by
#
Modi Ji plus Shah Ji, that the first five years will be spent to just crush the opposition.
#
And the next five years are when the real Vikas is going to happen without worrying about winning
#
elections. I hope that happens. I sincerely hope that happens. I think he is, if I may answer this,
#
I think that Umesh, you are overestimating the abilities and intelligence of these guys that
#
you think that they can have grand plans in 2014, the next five years, we will do no reforms,
#
no governance. We will crush the opposition and then we will actually do some real work.
#
That doesn't quite fit into Occam's razor of take the simplest explanation, which is
#
incompetence. You wanted to point out a question by...
#
Yes. So there's this question by Ranju Sarkar. And I think you are a better place to answer this.
#
He says, why is this government always in an election mode? Is the budget meant to be a
#
political statement? Despite a clear mandate, why is Narendra Modi reluctant to undertake
#
big bang reforms? Okay. So brief answer to this would be that what public choice theory would
#
point out is that, look, the basic truth of economics is that human beings respond to
#
incentives. Public choice economics tells you that that is also true of people in government.
#
What are the incentives of a politician? It is to come to power. Once he has gotten to power,
#
what are his incentives? It is to remain in power and to use the power to generate money
#
and to use that money to generate more power. It's an interplay between money and power.
#
And therefore, if a government is not in constant election mode, it would be a little bit surprising.
#
Now, what is the failure of our democracy and what we are not being able to handle is that
#
ideally, you would imagine in theory, how a government performs when it comes to governance
#
will determine how it does in politics in terms of getting reelected. You provide good governance,
#
you get reelected. You provide bad governance, you don't get reelected. That's how democracies
#
are supposed to work. I'm not sure that that is quite happening in India because a lot of
#
the governance that I mean, our politics is driven by driven today by these grander narratives.
#
And I won't go into the merits of those grander narratives, but there are grander narratives
#
which involve identities, which might involve a Hindu Rashtra, which again, I won't make a value
#
judgment on that. But the point of the matter is that whether you carry out labor reforms
#
or whether you keep the RBI autonomous is not an issue that is going to win you any votes,
#
which goes to the second part of the question that why hasn't Modi carried out big bang reforms?
#
Because there are no votes in it. There are, you know, I did an episode with Pooja Mehra
#
on an excellent book she wrote, where she spoke about the political economy of the last five
#
years. And her take was that when the Modi government came to power in 2014, they experimented
#
a bit with some reforms, they did the, you know, the bankruptcy law, and they were looking at
#
doing some small things, but then they quickly realized as they lost a string of state elections
#
that there is no political equity in that, that it doesn't affect the politics at all. And they
#
quickly moved to populism. Like Pooja's theory about demonetization was one of the reasons Modi
#
thought of it. And one of the reasons it worked was that regardless of whether it was a good policy
#
or a bad policy in practice, it was viewed by the people as hurting the rich and that always
#
sells. Whether in reality it does that or not is a different matter. I'd say it hurt the poor more,
#
but the narrative sold and, you know, they won the UP elections after that, and they just won the
#
last general elections. So the government's focus is just on building narratives that sell. In fact,
#
even these income taxes, which you spoke of raising the high, you know, you've pointed out
#
and it's perfectly logical that the, you know, the base of people who pay those taxes is so low,
#
it doesn't make a difference. But a lot of people love it. A lot of people love it because the
#
narrative is, oh, we are punishing the rich. I mean, so let's see that also, again, you know,
#
if it's, again, this is slightly convoluted. And so this, you know, because we used to have high
#
taxes, okay, we had a huge black economy. And because we had a huge black economy, the normal
#
guy did not go around to respect the rich or the process of wealth creation. And that is again,
#
you know, it's, it's coming back to hurt us in this way. So, yeah, I mean, that's a full circle,
#
basically. That's how it is. Politics and economics are sort of divorced. Good economics
#
doesn't make for good politics and vice versa. So what do we do? Another question from Sanjay
#
Foloria, who's a friend of yours? Yeah, Sanjay and me, we both doing our PhDs together. He completed
#
it. You did not. And therefore you have landed up here. I did not because I mean, the, the guide
#
wanted me to sort of put some mathematics into the research proposal, which I was not ready for.
#
So Sanjay's question is, will nudge theory work in the Indian context?
#
You are the better person to answer this. You are the behavioral economics boss.
#
Well, not really. It was like, as Gurunath Meharpan said in the context of the Chennai
#
super Kings, where he said, I'm just an enthusiast. I would say in this context,
#
I'm just an enthusiast. And I would say, look, the Indian state does so many things by such
#
hardcore coercion that in nudging is something that I think, you know, product designers can
#
use better user interface, designers can use better. But when it comes to the state,
#
our Indian state just believes in hard coercion and not soft nudges. So I think it's in the
#
economic survey that our chief economic advisor use that term. And yeah, I mean, it's nice in
#
theory and all, but you know, I really don't see the relevance.
#
So, you know, one of the talking about nudges, you know, one of the areas where nudges get
#
extensively used in Europe is what happens to the human body after death.
#
So in a lot of countries, you have the opt in option wherein if you want your body to
#
be donated, you know, after you die, and I mean, and for things to happen, you know, whatever
#
happens, then you have to opt in for it. And in the countries which have this opt in thing,
#
the number of donations is very low. Then there are countries where there is the opt out option.
#
The default is that your body will be, you know, will be donated for research or whatever. I mean,
#
your organs might be used on other people who need them. So in that case, the rates are high
#
because the option is to opt out and most people being as lazy as they are, especially if they
#
already get, they don't opt out. So, yeah, I mean, it's, it's sort of macabre, but yeah,
#
that's why the nudge theory is used quite a lot. I mean, nudge, I think the, I think the phrase
#
itself in this context of economics came from Cass Sunstein and it's interesting. So last year,
#
Cass Sunstein wrote this book called On Liberty, same title as the John Stuart Mill book.
#
So instantly I ordered the book and it comes and I'm expecting it to be about liberty,
#
but the book should really have been called on choice architecture because it's only about
#
nudging. Then I bought another book recently by him, which is again, it has some completely
#
unrelated title, but it's only about nudging. This is the one on the government. He writes two
#
books every year. He writes two books every year. They all have different titles. It makes it appear
#
as if they're all about different things are all about nudging, which is, I mean, credit to the guy.
#
I mean, how many budgets have you written about? It's like you are the Cass Sunstein of budgets.
#
That's experience. What is experience other than having, you know, doing the same thing
#
over and over again, smartly. That's true. Yeah. I'm expecting him to write a travel log,
#
like my trip through South Africa or something, and then it will all be about nudging.
#
But moving on from poor Mr. Sunstein, one question that a lot of people asked you,
#
so I won't even take any specific names here, is the whole five trillion economy thing.
#
What's the deal? I mean, it's an impressive number. Is that why it's there? Part of optics or is there something?
#
So, see, the thing is, India is a 2.7 trillion, 2.8 trillion dollar economy right now.
#
And by 2024-25, so, you know, so here's the thing. So first they said 2024, okay,
#
which basically meant five years. But then now they're saying 2024-25, which basically means
#
six years. So we have to go from 2.8 trillion to 5 trillion. One thing is, you know, we are sort of
#
setting a target in a currency, which is not our own. Okay. So the currency, it's the, you know,
#
it's the American dollar. Now, there are multiple things here. So we have to go from 2.8 trillion to
#
5 trillion. Okay. Now, it's not just our economic growth. What will also matter at the end of the day
#
is the conversion rate between the rupee and the dollar, right? So the government basically expects
#
that if the economy grows from, grows at around 8% in real terms, and then there is 4% inflation.
#
So which basically means we grow in 12% nominal terms. So from 2.8, we'll reach 5 trillion. But
#
at the same time, the one dollar, which is roughly worth around 70 rupees now will be worth 75 rupees
#
by then. So, you know, the basic problem with this argument is that nobody really knows where the
#
foreign exchange market is headed. The only thing that we can say for sure is that over a longish
#
period of time, the rupee will depreciate against the dollar simply because our rate of inflation
#
is higher than the American rate of inflation. So that purchasing power will get adjusted.
#
So beyond that, there is nothing. It's just a, it's, it's a good, you know, in strategy terms,
#
it's called a BHAG, you know, a big hairy audacious goal. What do they call it hairy?
#
I have no idea. You know, see, this is the problem. You know, I spent two years doing an MBA.
#
I remember these big things. And, but if you ask me to get into the nitty gritty,
#
I have no idea. I mean, that's a period of my life, which I have completely eradicated from my
#
memory. I had long hair once. And I suspect at that time, all the girls who had crushes on me
#
had big hairy audacious goals. Maybe. I'm sorry. That joke. So it's a BHAG in that sense that,
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you know, when, so I can get where it's coming from. I mean, if you want to do X, you obviously
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have to aim a little higher. So, but then, you know, for us to get around to achieve that,
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there are so many things that sort of need to be set right. So it's not going to just happen,
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you know, you know, you've given it this target and now it will sort of automatically happen on
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its own. It's not, I mean, it almost sounds like it's not the team of economists, which is deciding
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a target. It's a team of PR people saying what number sounds good and okay, 5 trillion. And then
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when you don't get there, you revise the estimates. So currently we are a hundred eighty eight hundred
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eighty nine lakh crore economy, right? So let's say if you were to sort of talk about in rupee
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terms, you know, the number to put out would probably be 400 lakh crore, but a 400 lakh crore
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just doesn't sound as interesting or as catchy as, you know, five trillion. So anyway, people have
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a problem in understanding how big a big number is, right? So that's the basic thing, right? So,
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and if you take that into account and take into account the fact that a trillion sounds so much
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more bigger than a lakh crore, then you have it. So, yeah. And even if you don't get there,
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A, we can revise the estimates and B, we can just point out that, Hey, you know, Nehru didn't take
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us to five trillion either. And, you know, and the funny thing is the way we are going,
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if for all we know that if, if there is a sort of a crisis in the U S the dollar might very well
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depreciate against the rupee. Who knows? Yes. So if the rupee appreciates, it'll get easier for us to
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get to the five trillion number. I mean, it'll then just a part of it will just be an accounting
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entry. There you go. Fascinating. I have taken up a lot of your time today. So we'll kind of
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bring things gradually to an end with a final question by an apologies to all the people whose
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questions we haven't taken. I didn't necessarily choose these with a final question by Prashant
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Dubey, who asks, do you have any recommendations to read more about the Austrian school by which
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he basically means economics? And both of us replied to him on Twitter. So would you like to
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for a general, you know, audience, I think one book that I sort of keep going back to, and which
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I've quite learned quite a lot from was Henry Hazlitt's economics in one lesson. And then the
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best part is you don't even have to buy it. It's really legally available on the internet. I mean,
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you don't have to like, you know, I mean, everything is available on the internet, but
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not necessarily legally. So, and the interesting thing about Henry Hazlitt's economics is one
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lesson is based on an essay by Frederick Bastia called that which is seen and that which is on
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scene. And Bastia of course, is one of my heroes and broken window fallacy. Yeah. And this show
#
is named after that essay. So basically the scene in the unseen and Henry Hazlitt's economics in
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one lesson kind of actually, you know, one can read a lot of Bastiat also, and a lot of Bastiat
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books are actually available for Bastiat actually didn't write books, books as much as he wrote
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as he wrote essays, long essays. So all these long essays are available on the internet. It's just
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that, you know, because it's a translation from French and because it's 200, 250 years old,
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the Hazlitt book works a little better. But after having read the Hazlitt book, I think it's a great
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idea to read Bastiat. In fact, Bastia has a book called The Law. So look that up. That is an
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absolute, it's available in Kindle and it's free. That's a masterpiece. And what I would also
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recommend is Thomas Sowell has a great book called Basic Economics, which is a wonderful book. He
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also wrote a book after that called Applied Economics, but basically, I mean, both of us
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are fans of Sowell and everything. In fact, there's this great Sowell book called Wealth, Poverty,
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and Politics that people should, but you should read that after you've read Basic Economics.
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Basic Economics. And also if you're looking for modern day textbooks, there are textbooks
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by Tyler Cowen and Alex Tabiroc of Marginal Revolution, who have both been on this podcast,
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by the way. But that's not why I'm recommending these books. I was a fan before they came on
#
the podcast. That's kind of why I invited them. So the causation works the other way. So they've
#
written textbooks on macroeconomics and microeconomics. Check that out. And a great online
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source is a marginal revolution university, which has dozens of videos and simple economic concepts
#
and is really, really good. In fact, there's one book that I sort of, you know, I learned quite
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a lot from. It was called very, very boringly Principles of Macroeconomics. And there's only
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one edition that ever got written. It was a 1979 edition. It was written by Dr. Sri Rangarajan
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and Bakul Dholakia. And Dr. Rangarajan at that point of time, I think used to teach at IIM
#
Ahmedabad. And I used to have that book and I read it once and I lost it. And I've never been able to
#
find a copy again. And it was just a brilliant book. I mean, if you want to, you know, understand
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economics, macroeconomics in the conventional way with a little bit of maths, not like, you know,
#
not maths, which would sort of break your head, but simple, you know, addition, subtraction,
#
division. It's a great book if you can find a copy of it anywhere. I mean, I haven't been able
#
to find a copy over the years, but it was just... If any reader can and if any reader finds it,
#
please tag Vivek on Twitter. He will pay a fortune for it. A fortune in relative terms,
#
given what we earn. From the five trillion, whatever we are earning from that five trillion.
#
A certain amount of that will join the GDP. Speaking of books, so the actual last, last
#
question I'll ask is something that again, a listener wanted to know. What book are you
#
writing right now? Tell us. Okay. So I'm writing this book called... So let me give you a little
#
bit of background before I tell you what the books... So basically I have an editor called
#
Sachin. So Sachin approached me with an idea on writing a book on the non-performing assets of
#
Indian banks. Which we have done episodes on. Which you've done episodes on. And I was like,
#
what is this? I just thought it's just too technical. And also my last book, with the
#
benefit of hindsight, I can say that it turned out to be a slightly more technical... I mean,
#
obviously it was very thick than I would have ideally wanted it to be. So I was a little
#
apprehensive about whether I should write it or not. Then I had a brainwave one day on what
#
the title and the cover of the book should be. So the title I thought of was Bad Money.
#
And I sort of thought that it should sort of be written in blood against a black background,
#
something like that. Or maybe you have the rupee symbol disintegrating. So once I had the title,
#
I sort of became very excited about writing the book. Because Bad Money is just a great...
#
The cover you described would be perfect for crime fiction. And I of course keep telling you,
#
you should write some crime fiction. So this book is basically about
#
the bad loans, the NPAs that public sector banks primarily have accumulated over the last decade.
#
But it's not just about that. It's also a lot about India's banking history and how things have
#
sort of gone wrong. And there's a lot of basic economics in it as well. I mean, like one lesson,
#
which I keep going back to over and over again, is that there is no free lunch in economics.
#
And it comes out beautifully in a lot of situations in this book. I mean, sometimes when
#
you're writing and you realize, so yeah, so that's the book. And I'm just about probably,
#
I'll finish the first draft sometime next week. So it's still some time away from publishing,
#
probably early next year, end of this year. So it also depends on how fast the publishers
#
move and it also depends on whether they like it or not. How can they not like it? And besides,
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I think you've reached the level, I mean, Shah Rukh Khan of economics and all that. It doesn't
#
matter. You should keep all this Hindi stuff. Yeah. That was Vivek speaking to our producer,
#
Abbas who will keep all the Hindi stuff. And meanwhile, Vivek, thanks so much for coming on
#
the show. Thanks for having me. If you enjoyed listening to this episode, head on over to Amazon
#
or your nearest bookstore and find Vivek's books, India's Big Government and the Easy Money Trilogy.
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You can follow Vivek on Twitter at call underscore Vivek. You can follow me at Amit Verma, A-M-I-T-V-A-R-M-A.
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You can browse past episodes of The Scene and the Unseen at sceneunseen.in,
#
thinkpragati.com and ivmpodcast.com. The Scene and the Unseen is supported by the Takshashila
#
Institution, an independent center for research and education in public policy.
#
Takshashila offers 12-week courses in public policy, technology policy and strategic studies
#
for both full-time students and working professionals. Visit takshashila.org.in
#
for more details. Thank you for listening.
#
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