Special Adviser to the United Nations Secretary-General Ban Ki-Moon on the Millennium Development Goals (MDG), Jeffrey David Sachs says India needs to raise its tax revenues from under 20 per cent of GDP to 30 per cent to raise resources for public spending. In New Delhi to take part in OECD World Forum, he tells Indivjal Dhasmana that political system in both the US and India is corrupt and being manoeuvered by the rich. The renowned US economist, who is a professor at the Columbia university, favours nuclear energy vis-a-vis coal-fired plants and regretted that India did not accept his suggestions on storing CO2 within these plants. Edited interview:
During financial crisis you spoke that India needs to raise its public spending. But, there is a growth slow down in India right now and fiscal deficit is very high. What will be your advice to India now?
I think India needs to raise more revenues over time. The total tax share in India's GDP is under 20 per cent. India certainly needs more revenues than this for public investments and public services. Firstly, India should tighten enforcement of tax laws, so that companies and wealthy individuals pay their taxes. Over time the whole tax system should be oriented to raise more revenues to, say 25 per cent and then to 30 per cent of GDP. In Europe, it is 40-50 per cent of GDP. In the United States, it is about 31 per cent of GDP which is too low for our needs.
Are you proposing some kind of additional tax on the super-rich in India that Warren Buffett had proposed for the United States?
Well, in general rich people should pay more taxes than they do. That is a general principle. We really feel about this in the United States, but this is true for India as well. We have also created a shocking system of tax evasion through tax havens like Mauritius, Hong Kong, the Cayman Islands and the Jersey Islands. The world tolerates this is really a measure of our political corruption everywhere. How can we have a system like in the Cayman Islands which allows people like (US Republican candidate in a presidential fray) Mitt Romney to put fortune there tax-free.
You talked about a nexus between big corporate and politicians in the United States and the need to restructure the economy to address the issue. In India, allegations are flying thick and fast over the same issues now. What is your take on these issues in India?
I do know that a nexus between big money and politics is corrupting democracy in many places and it threatens democracy in the United States, it threatens democracy in India and it threatens the rule of law. We need to put a lot of focus on this and help to have political systems in which there is one person one vote and not one dollar one vote. In the United States, we have what I call corporatocracy now, where corporations really run policy machinery to a large extent. They pay billions of dollars in campaign contributions, they pay billions of dollars in lobbying and the public has relatively little say on the issues. Companies get big returns on their political investments.
How do you view India in this respect?
I think India has a lot of problems squarely because there is a lot of money in political system. There is a lot of corruption. I did not point the finger because I started at pointing the finger at my own country. I regard politics in US highly corrupt. We have allowed it to be seen as normal that our federal elections cycle this year will spend, may be seven billion dollars in campaigns. I find it absolutely absurd, sad and dangerous.
And you will not spare your once favoured candidate Barack Obama as well?
Well he is raising about a billion dollars this year. He spent much of the year sitting with very rich people, who paid 35,800 dollars a plate to have dinner with him. I don't regard this as a healthy development. I wish he is spending more time in poor neighbourhoods. I wish he would be talking about poverty in America. So, I don't spare either side. I call this a duopoly, that is a corrupted duopoly. I am increasingly thinking that we need a third party to break this duopoly.
Is it feasible in the US?
It is feasible, but not easy.
Will you work towards that?
Well, I am waiting to see what happens in our politics right now.
Three years are left for millennium development goals for the 2015 deadline. Do you see these goals achievable or will we see deferment of the timeline?
Definitely, many countries would fall short of the goals. We know that a lot of countries in sub-Saharan Africa will fall short of many of the goals, India may fall short of some of the goals. Even if India does not fall short of goals, malnourishment of young children is far too high and is not coming down fast enough. I believe India should be spending more on social issues than it does. I would like to see it spending another 1-2 percentage points of GDP on public health to start with. Rich countries are also to be blamed for weak areas in MDGs. Rich countries have not met their promise of spending 0.7 per cent of GDP for development aid. The United States is especially weak in its development aid. I regret the fact that the US spends about 25 times more on military than on development aid. It creates more insecurity than security.
You have been saying nuclear power is greener than thermal power. But, nuclear power plants evoked strong protests in India. How far can nuclear power be successful?
Nuclear power has three serious problems-- most important is proliferation of fissile material. The second is that nuclear waste in these plants lasts for thousands of years and needs to be safely stored and third is the risk of Fukushima kind of meltdown. Coal-fired power plants create a lot of pollution that causes hundreds of thousands of people to lose lives say from lung disease. But, since they are slow acting and not visible it is not often attributed to coal burning. Second is their contribution to global climate change. That is absolutely devastating to planet. These are invisible so the public does not see the link between coal-fired power plants and long-term climate change. Risks on nuclear side are real, risks on the coal-fired side are surprisingly larger. Nuclear power is not perfect, but we don't have perfect alternative right now. The only option in coal is to capture and store CO2 that is produced in thermal plant. But it has not been tested. Many years ago I suggested to Indian government to test it. I think the attitude was let else test it, rather than we test it. I don't really regard it as a good answer.
You are giving too much emphasis on preventing damage to climate, but do you really see India needs it at its current stage of development?
I am very worried about India's vulnerability about climate change because of its very high population density with 17 per cent of world population and 70 per cent of the land area. The kinds of heat waves that India is experiencing--sometimes 50 degree centigrade-- for some days in the hardest points, India obviously can't ignore ramifications of global warming.
You have spoken much for the Occupy Wall Street movement. Why has it not gained much popularity?
It was gaining popularity when the young people camped in park. But, then police chased them out and there was no place for public image to illustrate to the rest of the American people what was going on. We are a media-driven society. So long as cameras' focus was there, lot of attention was paid. When powerful interests realised, they chased kids out one night. Powerful people won public battle in this case, because they are powerful.