So you want to be rich? A few years back this would have been viewed as a stupid question. You could want to be a doctor, engineer, teacher, scientist, professor, agriculturist, politician, film star, singer, musician or a businessman, but getting rich was never a vocation. Not so today ~ and it is not as difficult as you might imagine. The world has changed and the laws governing business are no longer written by your elected representatives, they are written by the super-rich themselves.

It is big money which boosts the nation’s GDP and gives our leaders a place at the high tables of international relations, while also creating a semblance of development for domestic consumption. The path to getting rich has therefore already been laid out over the last two to three decades for aspirational people like you. ‘Ease of doing business’, ‘too big to fail’, ‘trickle-down theory’, ‘liberalisation’, ‘globalised economy’, ‘private public partnership’, ‘disinvestment’, right-sizing’ etc. are all concepts created for you, which we have been made to believe are the bedrock of economic progress. Of course, the wealth you accumulate might not be rightfully yours, but then who cares. All you need to do is to stay focussed on exploiting the system to your advantage.

The first thing you need to understand is that in the world of the super-rich, education has no relevance. I would not like to name people here but do take a couple of minutes to Google for the top five to ten richest men and women in the world, as well as in India. The results are unambiguous ~ practically all of the richest people are school or college drop outs. Higher education is for employees you will be hiring to work for you. In any case, once you are rich you can set up endowments at Colleges and Universities and buy all the qualifications you want. The second thing to know is that you must either know, or work hard to cultivate friendship with, a few powerful politicians.

The higher they are placed the better. These friendships will be purely transactional, the ‘take some give some’ type. You need them to get off the block ~ to secure seed capital for your dream. With the right political backing, technical feasibility and economic viability and due diligence can all be managed. No need to be anxious here. The few people who get caught up in scams etc. are those who either did not have political backing, or had run afoul of the powers that be. Choose your friends carefully and if possible in more than one camp. You also need to re-locate some brothers, sisters, cousins etc. in a few countries where they can set up shell companies to siphon out the wealth you will be making in India. This is where you need to cultivate some tax officials also.

After all you don’t want regulatory authorities making things difficult for you. The third thing is to forget everything you might have been taught about ethics, morality, honesty and other similar high sounding words, which will no longer belong to your new world. Let stupid people debate about the importance of such values for a fair society, you are here to corner wealth. Let us start by understanding the financial ecosystem you aspire to be a part of. A recent Oxfam report published in January 2023, found that the richest one per cent in India own more than 40 per cent of the country’s total wealth, while the bottom half together share just 3 per cent.

Also, during FY 2020-21, approximately 64 per cent of the total Rs.14.83 lakh crore in Goods and Services Tax (GST ) came from the bottom 50 per cent of the population, with only 3 per cent coming from the top 10 per cent. Your aim is to part company with the stupid people who inhabit the bottom half of our population. To understand the landscape further, a new study published by the Delhi School of Economics titled ‘Do the wealthy underreport their income?’, ‘the total income reported by the wealthiest 0.1 per cent of families is only about a fifth of the returns from their capital, and at least 80 per cent of their capital income goes unreported in their income tax returns’. Their analysis shows that the wealthier a household, the lesser the income reported by it relative to its wealth. In simple terms, Indian billionaires pay a tiny amount of tax relative to their wealth, just like Jeff Bezos, Elon Musk and Warren Buffett do in the US.

Now this should really fire you up. Learn a few things like the tax regime applicable to capital income does not require the unrealised capital gains to be taxed or to be reported in the tax returns. This is your incentive to avoid realising capital gains and thereby reduce your tax liability. You must remain invested in equity capital and its by-products. If you want to be wealthy your realised capital gains should remain a tiny fraction of the returns from the capital held by you. Again, you must minimise the dividend payouts and thus minimise the distribution of profits among the stockholders.

Profits distributed as dividends have to be reported as personal income and hence invite tax liability for the recipient. In contrast, reinvested profits reduce their tax obligation and raise the value of equity, resulting in hefty tax-free capital gains for them. Compared to many other countries, dividend pay-outs by Indian companies are very less. For example, the average dividend yield of the top 100 private listed companies amounts to barely 0.85 per cent of the value of their reported equity income. You could also arrange for a part of the dividend income to be received indirectly in the accounts of financial intermediaries like limited liability partnerships and keep them away from individual accounts. Do you see the opportunities which have been created for you in our taxation system? It is there for you to exploit.

Do not be worried about failure, in fact it might be worth your while to let your company go down under. The system will take care of it. Remember, loans worth over Rs. 10 lakh crore have been written off in the last five years and for all the word play dished out as justification for their bookkeeping, banks have been able to recover only 13 per cent of it so far. The remaining will remain unrecoverable non-performing assets (NPAs) and will be made good from low returns on deposits, public money or tax recoverable from banks. The scale of our NPAs is 4-6 times the accepted levels across the world. This should reassure you. At this stage also quickly identify an accounting company which can audit your books and produce your annual reports just the way you want them to be done. Your tax consultants and auditors, if they are worth their fees, should be able to show you many more well-established options.

After all, you pay them well, just as you pay well to your top CEOs and Financial officers, for keeping your secrets and doing some creative accounting for you. To sum up, the world has been reconstructed for you since the mid-1990s. In India, the top 10 per cent have cornered an ever increasing proportion of the nation’s wealth, while the middle forty per cent have seen their share sinking dramatically. We have already talked of the share of the bottom half of the population. Only around 1.7 per cent of Indians pay income tax and most of them are workers and salaried persons, whose taxes are paid out of their wages and salaries. A report by Credit Suisse finds that around 3,500 Indians hold wealth that would provide annual incomes in excess of Rs. 500 crore but as per CBDT data only 179 individuals reported such an income in 2017-18. The richest in the world had learnt about these facts early on in life and instead of wasting their time on education, they quickly moved on to cash in. You should too!

(The writer is a former Chairman of the Union Public Services Commission)