THE INDIAN ECONOMY IN ADVERSITY AND DEBT 27 postponement of certain import-intensive but low-priority investment projects, with a re-scheduling (if not pruning) of certain defence-linked imports, with a crash programme of exports, with the mobilization of fresh loans on a medium-term basis from Indian workers abroad and the conversion of some current short-term loans from NRI's to medium term ones, we should be able to manage our external payments with our own efforts. Meeting the payments crisis by our own independent effort should also enable us to attempt macro-economic stabilisation in a manner not dictated by the IMF. The main means of bringing down the fiscal deficit should be direct taxation, and a reduction in inessential expenditure. Through greater discipline in tax-enforcement, changes in tax laws (relating to the 'Hindu Undivided Family') removing certain kinds of exemptions, and an adjustment of rates for top income brackets, the revenue from income taxation should increase. In addition, it is shocking that there is a virtual absence of wealth-taxation in India. While even advanced capitalist countries like Britain use wealth taxation as a means of retaining a degree of egalitarianism in society, India whose Constitution deems it to be a 'socialist' republic has virtually done away with it. Under the Rajiv government, estate duty was even officially abolished on the grounds that it yielded too little revenue! Even pending the introduction of a comprehensive wealth-tax, there is no reason why taxation of urban properly and of capital assets should not be immediately introduced. The former would have the added advantage of dampening to an extent the speculative boom in urban real estate. With greater resort to direct taxation, the tendency towards garnering revenue from indirect tax and administered price-hikes would have been reversed, which itself would be an anti-inflationary measure. The reduction in the fiscal deficit would dampen inflationary expectations and hence the speculative movement into commodities which would have an additional anti-inflationary effect. Even so however, it is also necessary in addition to protect the poor from the effects of such inflation as would occur. And this is best done through an extension of the public distribution system, both geographically into the rural areas as well as in terms of its commodity coverage. To keep the strain on the exchequer of such an extension of the public distribution system within reasonable limits, there should be an adjustment in the targeting of this system, towards the poor and the toiling people. In the medium term the focus of any economic reform must be land redistribution, the provision of literacy, health and sanitation facilities (including drinking water) and the development of rural infrastructure. The vital necessity of land reforms is underscored by the fact that even the successful East Asian capitalist economies owe their success inter alia to the post-war land reforms that they had. A thrust