Elect NaMo, BJP and NDA If You Want The Economy To Take Off

Elect NaMo...

Will 2014 be any better for the economy of India than 2013, or indeed the disastrous stagnation of the last five years, since 2008? It depends very much on the action of the voter at the general elections. Politics holds the key to the Indian economy in 2014 and beyond.

If Narendra Modi is elected prime minister, with sufficient numbers for the BJP/NDA to dominate the coalition to come, then most definitely yes, we will have a very good five years. But the less dependence there is on restive new allies, with sometimes impossible demands, the better in making up the 272 plus seats for a majority.  This will become the acid test of both survival and future economic prognosis.

Though, there may be a case not to prejudge the attitude and demands of new post-poll allies, particularly if the other parties find themselves well short of the necessary numbers. But this can happen only if the NDA racks up much more than the minimum of 2 72.  

The NDA however is expected to win, according to most responsible observers, and this is likely to immediately stimulate economic optimism, anticipatory buoyancy, followed by robust growth on the ground. But the NDA must be able to form a strong, stable, Government, without the threat of blackmail or instability from any of the constituents in the coalition.

The danger is in an inconclusive verdict, or worse. Next year is the Year of The Wooden Horse according to the Chinese Zodiac. Let us hope it brings rapid growth and cheer to a highly demoralised economy, and not extensive horse-trading in Government formation and its continued survival. Besides, a weak Government will not be able to take advantage of expected international opportunities as the West including America continues to recover slowly.

Never has the economy of this country been so badly depleted; and so dependent on the poll verdict going forward. This election outcome will be a make- or-break for the Indian economy and indeed for the NDA.

There are many reasons to change course from welfarism and populism at any cost. There is no reason to avoid making sure the work being done to alleviate the sufferings of the poor are supported with robust economic growth to pay for it!  This responsible stance will encourage new investment which has been put on hold for quite some time, by both domestic and foreign players.

It is not right to regard the question as an either/ or matter. Because, as things stand, it is a twinning of growth and expenditure that is called for. In Gujarat, the poor have benefited over NaMo’s three terms. That is why they have consistently voted for him and the BJP. Ditto is the case in Madhya Pradesh and Chhattisgarh. And it will once again be so in Rajasthan, after the slide- back years under Congress. But these are all State elections recently conducted.

How will the entire country vote in the general elections? A fractured, confused verdict as in Delhi will ensure that 2014 and beyond will be no improvement on present fortunes at best. And probably lead to yet another expensive general election, a national government, a round- table coalition with prime ministers changing after a time, President’s Rule etc. This is how Italy and Israel deal with fractured verdicts, and let us hope we don’t meet the same fate. Neither of their economies are anything to emulate! Israel survives on US hand-outs, and Italy is actually bankrupt and propped up somehow because of its membership of the EU.

The other possibilities if the numbers warrant it, are all depressingly Socialist to a greater or lesser degree. Every Party, including BJP for that matter, is committed and bounden to continue with policies of welfarism and populism enacted into law and in the form of various running schemes.

But right now, this is happening as an election sop/ploy, irrespective of how the Government pays for it with massive deficit financing. So, unless growth is also encouraged side by side; we can expect  even greater deficits, more subsidies and write-offs, an even less valuable rupee, lower emphasis on business and industrial growth, lower  GDP, sovereign rating downgrades, higher borrowing costs, rampant inflation, even worse non-performing asset (NPA) figures from the PSU Banks, higher taxes both direct and indirect, less FII and FDI investment, worse agricultural output, a frozen  agenda on economic reforms, reversed liberalisation, little or no infrastructure development, and gross political instability.  This list of woe is by no means conclusive!

The only political party committed to promote growth in the economy as the means to all other ends is the BJP/NDA. Punjab recently had a huge and promising investors conference presided over by the top leadership. NaMo’s Gujarat is known for its economic growth. Mumbai’s movers and shakers are all for economic growth, no matter who runs the Maharashtra Government, however badly.

And the Congress, which does pay occasional lip-service to growth belied by the UPA record, believes it can do something, after the elections, if it can somehow win first on its welfare agenda. That a Congress win is unlikely this time, is clear to all. Still, the venerable Party cannot be underestimated, or dismissed out of hand till every vote is finally counted.

(878 words)

December  30^th, 2013

Gautam Mukherjee