Bring On The Audacious Wizard

Bring On The Audacious Wizard

For the seven months of the Modi Government extant, it has been curiously hesitant when it comes to its economic initiatives. And this is jeopardising its core credibility. The dithering is in sharp contrast to its bold electoral and foreign policy moves, full of characteristic flair and dynamism. But since the entire Modi promise is predicated on economic growth, the Government must urgently realise that time-is-a-passing.

Could the gap in the electoral calendar provide the needed window of opportunity?   Between now, making ready for, hopefully, big-bang Railway and Union Budgets in February 2015; the Delhi State elections coming soon; and the Bihar elections later, next winter; there is some time to concentrate on pumping up the economy.

There is a lot of delivering to do. Reports of an Ordinance to launch 49% foreign investment permissible in Insurance, and an extension of the Coal Ordinance, is in the offing. There might have to be many other ordinances till its Rajya Sabha numbers are bettered, but the Government should not be shy about it.

The Administration, in addition, wants to  urgently push through thousands of crores worth of stalled Infrastructure projects, and revive the lucrative Mining industry.  A new, user-friendly law for the Financial Markets, instead of 60 overlapping ones, is also in the works. But can this Government implement any, or all of this, with speed, verve, and confidence?

Various commentators have been trying to make sense of Modi’s economic caution and diffidence, but at the core, it still remains a mystery. Could it be that Modi’s Gujarat formula of driving change via the bureaucracy is not working here? Could it be the resistance and vacillation of the Finance Ministry and the RBI? Could it be the absence of an economic vision to take the country speedily towards a laissez faire free-market?   Instead, we have clumsy attempts at ‘Forever Young’ Socialism, mixed with pseudo- reformist nostrums. This makes for a peculiar tasting cocktail, that smells fusty; of UPA trained bureaucracy, and date-expired ingredients.

The Modi Sarkar has shown an unjustified preference for gradualism, while the economy continues to gasp. There is an inexplicable urge to continue various UPA initiatives. There are no interest cuts to revive the investment cycle. There are far too many taxes. Why is MoS Jayant Sinha talking of reintroducing Estate Duty, abolished way back in the eighties? What kind of luddite signal does this send out? The Finance Ministry has not pushed the retrospective taxation button, but neither has it firmly shelved it. The much reviled MAT tax is proposed to be cut to 7% in SEZs, instead of abolishing it altogether.  Where is Modi’s personal imprint in all of this?

And anyone could have told the Finance Minister his taxation targets were unrealistic, given that the economy was in intensive care when this dispensation took over. Income Tax on Individuals and Corporations does not yield more than it costs to administer, imposed, as it is, on a very narrow base.  So why is this Government fighting shy of introducing a universal but minimal Expenditure Tax instead? And what about downsizing the expensive Government itself?

Where are the big-bang reforms to transform the economic destinies of millions of young people? Nothing has happened yet, except for the deregulation of diesel pricing, on the back of a drastic fall in international oil prices.

Today, given the tax shortfall, Mr. Jaitley will probably have to cut rupees one lakh crore in Government expenditure, if he is to achieve his deficit target. Already, there is a painful 20% cut in Health-care which hurts the poor the most.  

BJP President Amit Shah’s ‘Total Politics’ approach, wherein he doesn’t allow any walk-overs  to so-called unwinnable seats, has paid rich dividends. From the state level in Gujarat, to the general elections in Uttar Pradesh, and now in a series of State Assemblies, the BJP Party machine has worked to stretch targets.  

Prime Minister Narendra Modi, the fountainhead of the new BJP that promotes  ‘Sabka  Saath Sabka Vikas’,  his personal charisma undimmed, has  continued to be the chief election campaigner. He is ably supported by Shah, following-through in his wake. The BJP has, over the last year, won the highest share of the popular vote also, time and again. It will, unless the public turns sceptical, win the big states of Bihar, West Bengal and Uttar Pradesh too, and before the next general  elections in 2019.

But, great as this election juggernaut is, it must be backed by solid growth on the ground, before the shadows lengthen any more, using, perhaps, the billions pledged by foreign countries already.

The Modi Government must now reveal it has the audacity and wizardry to grow the economy to unprecedented heights. Then it can surely rule a Congress Mukt Bharat for at least the next ten years.

(814 words)

December 24^th, 2014

Gautam Mukherjee