Indian Government: Your, Mine or Ours?

As a student of Finance, Debt and Equity have always been the conceptual building blocks in my studies and in my professional life. As a quick basic introduction, both are modes of financing operations of any entity. Debt financing involves provision of capital with a promise of periodic interest payments (fixed, floating or zero) and the repayment of the upfront capital along with total interest at the end of the tenure - a home loan & the EMIs associated with it are a classic example. In this mode of financing, the financier does not have any ownership in the enterprise to which the financing is provided. As against this, in Equity financing, the financier has direct ownership (either active or passive) in the entity to which the capital is provided. The most prevalent example is owning a common share of a publicly listed company making the owner of the share a shareholder in the said company and hence a proportionate 'owner' of the entity and its business. Being an owner of the business exposes one to its risks and rewards in significantly higher proportion. The cash flows are irregular more to say and the primary source of gain is from capital appreciation of the value of the business, i.e. the Market Capitalization, of the firm. Thus, more often than not, Debt has assured cash flows, fixed periodicity and lesser risks attached to it along with zero ownership in the enterprise while Equity has proportional ownership, irregularity of cash flows and higher risk/reward attached it. For the sake of this blog, I am ignoring the convertible modes of financing.

With the basic of Debt and Equity behind us, I'll proceed with a keen observation of mine which has grown stronger in the past few months, on how politics has evolved or changed in the past five years if I look through the lens of Debt & Equity. Till 2012-13 approximately, we could see the Debt Model operating in full flow while post it, the Equity model has started taking shape with increased proportion as a percentage of our total population. I am seeing comments over the social media and outside it as well which are indicative of this difference though I am yet to come across any article explicitly putting forth such an observation. Let me elaborate:

Since independence, Indian politics has been steeped in Nehruvian Socialism. Even before 1947, the English rulers were, the proverbial 'Maay-Baap'. The successful imbibing of the 'Maay-Baap' mentality by MacCaulay through the education system and the Governors through the political system cemented the idea that citizens in a society are dependent completely on the crumbs provided by the government. This very idea crystallized the Debt Model of Governance once we gained independence - i.e. the citizens should pay taxes and finance the government while the government would have periodic doles to hand out. The citizens would be free from 'ownership' of the government. As we know, with any ownership comes responsibility and authority; if we look at governance through the meaning of these words, lack of ownership shown by the citizens towards their government implies complete de-coupling of the sense of responsibility from the actions of the government - its consequences would be felt of course but the sense that this is 'My Government' would be missing. Human tendency is very clear in this aspect - by and large, there is a vast difference in how any average human being would treat his own house or car or belonging as against that of another. What this has unfortunately done is that it has burnt it hard in our minds that our responsibilities end the moment we vote or with the fact that we pay direct/indirect taxes. Just as any bank would be least bothered about the enterprise's internal functioning as long as the enterprise is able to pay the interest on the loan it has received from the bank, have we as a civilian mass become least bothered about the Government's internal functioning, its goals/objectives, the need of specific allocations to other fields or other geographic regions within the country etc? Are we just bothered about what we get in return as per our expectations? Is that the generic case or are we changing?

The change in the central leadership after 2014 saw a tremendous rise in inclusiveness - we saw more people becoming a part of the banking system, more people part of the tax net, more people saw electricity & roads reach their towns/villages. The Modi Government introduced MyGov, PRAGATI, Mann ki Baat, Meri Sadak, Swachh Bhaarat, Hum Fit Toh India Fit, Meri Beti Meri Pehchaan etc platforms/events/campaigns for enhancing citizen-governor interaction. We saw increased communication - to and fro - through social media and beyond. We saw a redressal mechanism in place which acted on this interaction and resulted in issues being fixed at the very ground level. If we simply read the titles of these campaigns, we notice a lot of stress on the words 'My', 'Mera', 'Meri' etc - each campaign is highlighting the importance of participation of the 'self' in governance. Each campaign is encouraging increment in the ownership stake of the citizen in 'his/her' government. Each campaign is exposing the audience to the vast expanse of the needs of the entire civilian mass of 1.25 billion people of this nation thus sensitizing every Bhaaratiya towards the need of seeking, not as an individual but as a Bhaaratiya. Basically, each campaign is selling the idea of Equity Model of Governance.

In a gist - the Debt holder asks "What is right for me?"; the Equity holder asks, "What is right for the business?". (or in this case, Bhaarat, the Government of which is its CEO)

The Debt holder citizen would ask, "I voted for you; what have you done for me?"; the Equity holder citizen would ask, "I voted for you; are you making my vote count?"

The Debt holder citizen would ask, "I pay taxes; what are you returning to me?"; the Equity holder citizen would ask, "I pay taxes; how are you utilizing them?"

The Debt holder citizen would exclaim, "You are looting me through petrol prices! Such a shame!"; the Equity holder citizen would postulate, "Why have the fuel rates not been normalized through GST? Why are the taxes on fuel so high? Where are those taxes going?"

The Debt holder citizen comments, "India is dirty and there is pollution & filth everywhere; what is the municipality or Modi doing? Swachh Bhaarat has failed!"; the Equity holder citizen comments, "India needs to be cleaner; let us not spit on roads or not throw garbage in rivers and reduce open defecation. Let us reduce plastic usage and recycle to the extent we can."

The Debt holder citizen comments, "There is so much indiscipline in India; there is no future at all"; the Equity holder citizen assures, "Let us try reducing indiscipline at our end - let us halt at red traffic signals and let us be at work on time."

The Debt holder citizen comments, "All politicians are crooks and looters of our taxes."; the Equity holder citizen resolves, "Since politicians are our subset and they are among us, let us stop dishonesty and manipulation at our level first. Let us resolve not to fudge our income taxes but rather push for effective utilization of the same for constructive macro-economic growth. Let us not fudge our work timings and quantity of work. Let us not follow dishonest and unethical work practices; let us not cheat our clients henceforth. Most importantly, let us vote for the right leaders and only for those who believe in Bhaarat first; let voting day not be a one day vacation but an important opportunity."

The Debt holder citizen stays on a one track mind, while the Equity holder citizen, since he/she is part of the risk/reward curve which fluctuates with time, is willing to be more broad minded in his/her approach. The Equity holder citizen knows there is no black and white, but an entire spectrum of colours to wonder upon. The Equity holder citizen is open to exploring the inter-relatedness of different facets of our politics and life while the Debt holder citizen sees everything as disconnected entities. The Equity holder citizen refuses to promote, encourage and support (financially or otherwise) all those individuals who or entities which (may it be Corporate, Bollywood, Political, Social or Individual) work against the best interests of Bhaarat because an Equity holder citizen is a direct owner in the future of Bhaarat and not its extortionist!

I am a proud Equity holder in and of Bhaarat - I voted for it's government and I pay taxes to it; I halt at red traffic signals, I don't litter on roads, I am honest in my work and I believe that there are scores more like me. I can proudly say that we as an electorate are moving out of this cage of Nehruvian Socialism which bred the Debt Model of Governance. More and more voters and citizens are willing to be Equity holders in the future of Bhaarat and more of us believe that constructive change is sustainable and Bhaarat would be crossing an important uphill milestone come 2019 for we have a leader who believes in Equity holding over Debt! It is not just the leader alone but more people than ever before believe what John F. Kennedy said :

Ask not what the country can do for you; ask what you can do for your country!

Jai Hind!