Tryst with India's Economic Destiny

Tryst with India’s Economic Destiny

The GDP rate of growth under the UPA Government has sunk to a 10 year low of 5 per cent, a great deal slower than the rate of inflation, ruling presently at historic highs, and certainly in double digits at the retail level. So, in effect, the economy is shrinking, and heading towards a debt-trap fuelled by an ever-widening fiscal deficit caused by a spendthrift and adrift Government. And there are no fresh ideas to deal with the situation either, apart from taxing the miniscule number of rich people who happen to be amongst our most productive, and reviving other such long discarded Socialist shibboleths.

A ray of hope comes from the latest move from the EU to formally bring closure to their informal boycott of the Gujarat Government. It has come not a day too soon. This initiative follows individual engagement by the Governments of Sweden, Denmark and the UK over the last year.

Ironically, the EU denied the obvious economic motives for engaging with Mr. Modi, by saying the development was prompted by his “re-election”. Since this is Mr.Modi’s fourth consecutive term in office as Chief Minister of Gujarat, this fig-leaf of a reason seems a little fragile.

The fact is, several leading US and European companies have already breached the Rubicon and  invested in Gujarat, or, like the Germans, are firming up substantial plans to do so. This particularly after the various Vibrant Gujarat Summits held there bi-annually since 2003. As the best in India Inc. and several auto majors from around the world have long recognised, the doing-business-in-Gujarat story is just too compelling to be ignored or left out of.  

Besides, trying to punish India with sanctions and lock-outs post our going nuclear under former Prime Minister Vajpayee, was also finally seen to be counter-productive by the international powers themselves. There too, it took some years of recalcitrance, till matters were finally set right by President George W Bush of the US and all the other declared nuclear powers.

Gujarat is likely to benefit from the EU’s commercial initiatives. But, the truth is, the more pressing need is that of the Europeans and the Americans themselves.

While Gujarat is experiencing China- like double digit growth, most of the EU is tottering on the brink of bankruptcy. And recovery, such as it is, is tepid and plagued by the spectre of stagflation. These economies also suffer from vast over capacity and duplication.

This despite there being many large, tempting, once hallowed enterprises, now struggling and ailing or worse, all over  Europe, the UK, Canada and the US. They find themselves forced to conduct themselves much more democratically or face something of a “closing-down” sale. Volvo of Sweden is now Chinese owned. And Tata of India owns the iconic Land Rover and Jaguar companies in the UK.

Companies from India and China, with deep pockets and large banks willing to support them, have the additional advantage of huge domestic markets. And a hunger for, and appreciation of, the iconic brands from Europe and America. They have been out shopping for a while already, but some of their targets, such as the Tata attempt to buy out the Orient Express Hotel Group, are still thwarted by the quarries having trouble coping with a vastly changed world.

The other bug- bear, that has long prevented India from realising its potential, has been its inertia, its red- tape, its messy democracy and lack of commitment to growth. There has long been a gap between words and deeds that has repeatedly disappointed people wanting to do business with India.

But as Mr. Modi himself said at SRCC on the 6^th of February 2013, Gujarat has achieved spectacular results using the same system that has stymied other parts of India. This too, as undeniable fact, has impressed the Western world. Gujarat is something of an exception but its chief executive may well be poised to prove the rule.

Mr. Narendra Modi on the national stage can take forward the Nehruvian vision of India’s manifest destiny unveiled at midnight on 15^th August 1947. Jawaharlal Nehru himself saw Mr. Atal Bihari Vajpayee as a future prime minister, after witnessing the young orator speak rapturously, mesmerising his audience with his vision.

The ever popular Mr. Vajpayee did carry the nation forward. Our largely completed “Golden Quadrilateral” road network is just one of Mr. Vajpayee’s bequests to the nation. But who is the next man to whom such a baton can be passed? Who can do justice to the lyricism and promise encapsulated in the opening words of Mr.Nehru’s great speech? The Europeans seem to have cast their vote in favour of Mr.Narendra Modi. It is now up to the Indians themselves to follow suit.

(788 words)

February 9^th, 2013

Gautam Mukherjee