The Start Of An Economic Tsunami
Poverty
is not socialism. To be rich is glorious.
Deng
Xiaoping
Twenty three years ago, in 1991, the first
stage of India’s economic liberation, the unshackling from failed socialist
ideas, took place for the first time. It occurred in the context of a balance
of payments crisis, enabling the Congress Government led by then Prime Minister
PV Narasimha Rao and his Finance Minister Manmohan Singh, to take some bold
steps.
Unfortunately, instead of pressing on from
that excellent start that helped India to unprecedented high speed and
consistent growth over a number of years; the follow through never came via the
successor regimes. Still, it changed India so substantially that many features
of an earlier time, full of shortages, restrictions and red tape, largely
disappeared for good.
But things did not proceed apace as
expected. Instead, there was a slide back to the old ways. This was to the
general disappointment of business and industry and the investment community
both domestic and international. Myths of growth that benefited the few with
nothing for the majority were belied by the statistics, but still remained rife
in the Liberal-Left political discourse.
Whilst what was done at first was not
rolled back, neither was it built upon to quicken the pace of India’s
development. This was even most marked in the ten UPA years just past,
reminiscent, and almost a throwback to the low growth Indira Gandhi era, which
resulted in confusing the country’s policies and initiatives. And slowed the
economy to a decade low near standstill.
This year 2014, counting from 16th
May 2014, when the electrifying election results came in, has changed our
possibilities, and is another watershed. This date, will, without doubt, be
written up twenty years from now to mark the start of the Second stage of
Indian Reforms.
This new stage in our modernisation, will,
at last, fulfill the promise of 1991, but this time in transformational and continuous
motion. Like the initiatives of the visionary Deng Xiaoping of China, Narendra Modi’s bold developmental policies
will take this country into the first rank of
nations while carrying all of its people into prosperity.
Speed, scale, skill, and boldness, is of
the essence, for we have lost much time. And judging from the plethora of
initiatives announced in just two weeks of Narendra Modi’s Government, we need
not worry on this account. Prime Minister Narendra Modi is aware that his grace
and favour period, the ‘honeymoon’ interlude, will be short. The millions of
young people, his impatient fans and voters, want to see quick results. Having
said that, the mandate ensures a free hand and the wherewithal to do things his
way.
Nevertheless, of the many pressing demands
on a prime minister’s time and attention, top emphasis must be given to the
revival of the economy. Winning the several Assembly elections coming up is
very important, as are various security issues and other aspects of good governance.
Many of these broader concerns and emphases have been recently outlined in the
President’s address to the joint houses of Parliament. But the money must be
urgently seen to start flowing again, like life-giving water, into the stalled and parched economy. This,
through the revival of domestic and foreign direct investment, in a manner that
mimics the ramped up FII into the stock and debt markets which has swelled in anticipation of the expected
growth over the next year and more.
The President’s address has indeed laid out
a road map of exciting and far reaching intentions. The Annual Budget, coming
in July, is expected to demonstrate and delineate a strong reformist flavor and
reinforce the bullish excitement of a country and economy on the move. This
will enthuse business, industry, the prospective and existing foreign investor,
security analysts, international rating agencies, think tanks, foreign
governments, private industry, the middle class, urban and rural people,
farmers, students, job seekers etc. and mark a departure from the timidity and
sluggishness of the past government.
With an excellent symbolic start made with
the SAARC countries already, a number of foreign visits are already scheduled
in short order. The visit to Bhutan may be to underscore India’s commitment to
this strategically located nation, and economically important too for its
robust electricity generation, actual and potential.
Substantial and specific results are expected
from Modi’s forthcoming visit and interactions in Japan. This particularly on
the projects stalled in the Delhi-Mumbai Industrial Corridor.
And though there was no mention of Iran in
the Presidential address, it must be noted that there has already been an early
meeting with Oman’s foreign Minister, who reportedly came about reviving the
Iran-India Gas Pipeline project hanging fire for long. Israel, another country not mentioned in the
President’s Address, could do much to contribute to the 100 per cent in Defence
Production initiative.
Similarly, the swift meetings with the
Chinese Foreign Minister, followed by one expected with President Xi during the
BRICS Summit scheduled for August, should yield substantial news - on the
modernisation of the Indian Railways for example, high speed trains, other
infrastructure, and perhaps even defence related investment.
Modi’s meeting with President Obama, slated
for September end, is being viewed as a fresh start to the stuck ‘strategic’
relationship between the two great democracies. Some reports suggest that the
US will seize the initiative and set India on its path to becoming an ‘$10
trillion economy’, that is, five time our current size. This has strategic
geo-political implications of course, but does America have the consistency of
purpose to execute this? The Modi
Government, in any event, must be mindful of the momentum it must generate. It
cannot afford to be stymied by the typical US ifs and buts when it comes to
execution.
The proposed Vibrant India Summit, chalked
in for November, should do great things on the national platform going by the
success of the Vibrant Gujarat Summits over several years. The proposal to
deepen and widen the stock markets to absorb more FII is also most welcome, and
reports that suggest the Debt Market ceiling for FII in Government Bonds is to
be raised will also be enthusiastically
received.
The expectations raised by Narendra Modi’s extraordinary
and visionary election campaign are very high. By the end of just 100 days of
Modi’s governance, a self-imposed thing, he fully intends to let the public feel,
believe, and trust, that his Government is going to transform their lives.
It is the credibility of Modi’s promises,
he knows, the strength of his personal determination and calibre that is at
stake; but Narendra Modi seems undaunted by the prospect, and continues to
exude supreme confidence.
(1,104
words)
May
9th, 2014
Gautam
Mukherjee
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