Jeffrey Sachs, director of The Earth Institute at Columbia University, and also special adviser to the United Nations Secretary General on the Millennium Development Goals (MDG), says India needs to raise its tax revenues substantially, for public spending. In New Delhi to take part in the OECD World Forum, he tells Indivjal Dhasmana the political system in the US and India needs big change and why he favours nuclear energy. Edited interview:
During the financial crisis, you said India needed to raise its public spending. Growth is slowing here and the fiscal deficit is high. What is your advice to India now?
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. First, it should tighten enforcement of tax laws on companies and wealthy individuals. Over time, the tax system should be oriented to raise 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 US it is about 31 per cent, too low for our needs.
Are you proposing some additional tax on the super-rich in India, as Warren Buffett had proposed for the US?
In general, rich people should pay more taxes than they do. 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 but it is really a measure of political corruption everywhere.
You talked about a nexus between big corporates 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.
A nexus between big money and politics is corrupting democracy in many places 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 US, we have what I call corporatocracy, where corporations really run the 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?
India has a lot of problems squarely because there is a lot of money in political system. There is a lot of corruption. I started by pointing the finger at my own country. I regard politics in the US as highly corrupt. We have allowed it to be seen as normal that our federal election cycle this year will spend maybe $7 billion in campaigns. I find it absolutely absurd, sad and dangerous.
Three years are left for the MDG (millennium development goals) goal deadline. Are these achievable or will we see deferment of the time line?
Many countries would fall short. We know a lot of countries in sub-Saharan Africa will fall short of many; India might fall short of some. Even if India does not, malnourishment in 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 one to two percentage points of GDP on public health, to start with.
Rich countries are also to be blamed for weak areas in MDGs. They’ve not met their promise of spending 0.7 per cent of GDP for development aid. The US is especially weak in this. I regret that the US spends about 25 times more on military than on development aid.
You have been saying nuclear power is greener than thermal power. But nuclear power plants evoke strong protests in India.
Nuclear power has three serious problems. The 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. The third is the risk of a Fukushima kind of meltdown. Coal-fired power plants create a lot of pollution that causes hundreds of thousands to lose lives, say from lung disease. But since they are slow-acting and not visible, it is not often attributed to coal burning. The second is the contribution to global climate change. That is absolutely devastating to the planet. These are invisible, so the public does not see the link between coal-fired power plants and long-term climate change.
The risks on the nuclear side are real but those on the coal-fired side are surprisingly larger. Nuclear power is not perfect but we don’t have a perfect alternative. The only option in coal is to capture and store the carbon dioxide produced in thermal plants. But it has not been tested.
You are giving a lot of emphasis on preventing damage to the climate. Do you really see India needing it at this stage of development?
I am very worried about India’s vulnerability on climate change because of its very high population density. The kinds of heat waves that India is experiencing -- sometimes 50 degrees Centigrade -- for days in the hardest points show it can't ignore the ramifications of global warming.