Resource Rents

Rents are giving rise to numerous conflicts, between different elements of society, within the business community, within the political class and between parties.   Rent sucking (Rent creation cum rent seeking) is the greatest source of inequality in income and wealth. A resolution of these conflicts is essential not only for social harmony, but for equitable growth. There are three major sources of rent that need to be addressed.

(a)                Natural resources (minerals, land, spectrum)

 Auctions with post auction tradability between licensed holders. This can be complemented by capital gains taxation of such rights. Sound regulations and regulatory system are pre-requisite/complement as otherwise; post auction changes in terms in favor of the winner can vitiate the potential gains from the auctions.

(b)               Land Use

 The quality of land use planning and implementation has to be raised by training city officials and changing the rules.  Involve stake holders in land use change decisions through land use hearings & appropriate change of land use based on these hearings, before acquisition starts.  Once this is done market price will reflect the true value of the land as long as government makes the information available to all land owners and potential land acquirers. 

            We must ensure that pending land acquisition and rehabilitation laws, level the playing field for all participants (land owners, land buyers and land users) while ensuring that there is no disincentive for economic development and growth.

(c)            Government Procurement

             APublic Accountability Information System (PAIS)”, that insures that all information is put on a web site accessible to the public is needed.  This would include the nature and scope of job/purchase, amounts paid and to whom.