Sonianomics Versus Modinomics

Sonianomics Vs Modinomics

An hour long civilised debate moderated by journalist Rahul Kanwar, between Rajasthan Chief Minister Vasundhara Raje and outgoing Union Minister for Communications and IT Kapil Sibal, at the  ongoing India Today Conclave 2014; was, by no means conclusive. Civilised debates tend not to press any point. Besides, the time may be drawing near when Sonianomics, such as it is, fades from the scene, even as Modinomics spreads across the nation to take economic growth forward.

This may very well turn out to be the decisive electoral verdict on the merits and demerits of each approach. The most noticeable aspect of Sonianomics is Welfare, and the timing of a great deal of it, suggests it is aimed at garnering enough votes to win the general election for Congress and the UPA. Kapil Sibal is holding on to that hope in the face of Opinion Polls and other assessments that indicate the very opposite. He grandly said NDA has decided on its own that it will win the election, but this is in ‘the air’, but not, as yet, on ‘the ground’.

Sonianomics, by Kapil Sibal’s description, has certainly put its money down, along with its bets. Kapil Sibal said the gross budgetary support has been upped from 4.71 lakh crores in 2004 to 16.65 lakh crores in 2013. That is a roughly four-fold increase in welfare expenditure through the UPA years! But it is glaringly obvious that the money has not gone into the development of infrastructure, health, education, social justice, etc. in anywhere near similar proportion. Though the adjunct of Manmohanomics alongside, all but forgotten weeks before the election, has contributed in a muted if inadequate fashion to most of these things, the effort has been so weak that it has disappointed and angered the people. It is this inadequate development combined with massive corruption that is the stamp of the outgoing UPA Government.  

But at the Conclave, there was a palpable courtesy between the sparring partners, and an exploration of the two approaches to development espoused by the UPA and the NDA respectively. Kapil Sibal displayed a broad frustration with the widespread perception that the UPA has let the people down, when so much good work, according to him, has indeed been done by the UPA Government. However, he claimed he did not know the impact of all this good work on the people of India, as if they could not properly understand the actual situation, and how they would vote in the forthcoming election. In a roundabout way, he seemed to agree that the people were very unhappy with the UPA Government but felt, predictably, that this was undeserved.

The fact that the rising star of  Modinomics was being quietly defended by a State CM, underlined the commitment of NaMo to  ‘reach to the last man in the state what is taken for granted  in Delhi’ as Ms Raje put it. Besides, Modinomics was not created or nurtured in Delhi at all. This is the first time that a State CM  has been elected as the prime ministerial candidate by his national party. A first time, when the prime-ministerial candidate knows first-hand the difficulties faced by the States.

Vasundhara Raje illustrated this by saying about 70% of the current State budget is composed of central programmes to be administered by the states. Another 20% odd of the state budget accounts for the salaries and pensions of the state employees. In the end, the Chief Minister is left with as little as 5% of the budgeted funds to spend on a discretionary basis to help his or her people. The trend of returning discretionary power and funds to the Chief Ministers and the States is a key plank of Modinomics and is being keenly anticipated by the states.   

Kapil Sibal, UPA Union Minister in different capacities for ten years now, asserted, falsely, that the welfarism of Sonianomics was funded by economic growth. This is, of course, mostly untrue. Welfare spends, though sometimes partially budgeted for, is funded through the holdall deficit mechanism. This means piling on the debt to the books of the future Government. Besides, GDP Growth has plummeted in UPA II. 

It stands at some 4.5% in this fiscal. Sibal, in order to disguise this, valiantly insisted on referring to average growth figures. The fact is, that UPA have not been able to stabilise the economy after the global down-turn of 2008.  Government Debt has been increased  exponentially, gravely stressing the nation’s financials.

So, while Modinomics, reading between the lines, tries to deliver the infrastructure dividend to the states to promote the ‘happiness quotient’ of the people as Raje put it, while promoting employment, business and industry; Sonianomics decries this approach and concentrates on massive give-aways and doles even at the constant expense of weakening the economy.

(800 words)

March 8^th 2014

Gautam Mukherjee