Cutting Through The Noise

Cutting Through The Noise

We are a deeply sarkari nation- Mihir Sharma, in Restart

What is the Modi Government’s free-market Guru Jagdish Bhagwati’s take on the bazaar clamour that passes for Indian democracy? He ignores it, albeit from distant Columbia University in New York, and some, if not all of the polemics too.

The 78 year old Bhagwati says, more than once, that he wants to see India open up multi-brand retail to foreign investment on liberal terms and all over the country. And never mind, presumably, that the old  LK Advani-led BJP made much of being opposed to it at the pre-general election stage. That was when the UPA passed a mangled version of the permission, with a characteristic profusion of built-in ifs and buts.

It made a non-starter of the law, even in then Congress ruled Delhi, with its popular three- term Chief Minister Shiela Dikshit at the helm. That missed opportunity seems like a distant memory now, with the Leftist and purported mohalla/block/slum representative democracy, practiced by the ruling AAP today.

But can Modi’s central government, with some of its mooring in the trader community, open up the barrage using his majority in the Lok Sabha? Would it want to? Is it already too late in some senses because e-Commerce seems to have stolen a march? Has technology Ali Baba style, talking of drones to deliver tea to individuals, trumped all? Or is it still a potential GDP and sophistication of the supply backbone driver, given half a chance?

Can the Modi Government with its absolute majority in the Lok Sabha, and a woeful minority in the Rajya Sabha, steer any of its desired legislation through? How much costly time will it allow itself, before using a joint session? And in such an event, can it carry some of its outliers and sympathisers to ensure victory; given the endemic turbulence in parliament?

States run by non NDA governments, and their MPs in parliament, seem to see the Government’s difficulties as their opportunities to extract concessions. Nothing is evaluated on its merits, let alone would-be/ wannabe laws. It is a travesty of the parliamentary system, rendering a non-functioning central legislature.

Let us see what the Modi Government is eventually able to do with the virulently opposed Land Acquisition Law and the Insurance Bill in this Budget Session first. And the Coal Law too, even though its passed muster in the Lok Sabha.

The Opposition, decimated as it was in the last general election, is determined to ensure the failure of this Government by hook or by crook. It is using extreme filibustering, street protest, propaganda, and media warring.  The gauntlet has been thrown down. It is up to Modi’s gumption to power through.

But, and here’s the thing- the world thinks he will win, and this is all just so much noise. From abroad, the perspective on India’s future seems vastly better, though most of the early confidence is coming from the nabobs of the financial markets. But surely, the projection of 8.5% GDP growth in 2015, is indeed mouth-watering.

Warren Buffet , the ‘Oracle of Omaha’, the world’s best known value investor, could have been a natural for India. But irony will rule. One of the richest men in the world, he pulled out of the Indian insurance market in 2013, after just two years of engaging with Indian bureaucracy and government.

His favoured successor, of Indian origin, Ajit Jain, is also his insurance major domo, responsible for a lot of the Berkshire Hathaway Group’s profits. Clearly, Jain and Buffet think life is too short to tangle with India.

But Buffet’s pal and fellow billionaire philanthropist, Microsoft founder Bill Gates; younger, more mobile, and persistent; is indeed still big on both Modi and India.

But what does the other oracle, Marc Faber, perched at Chiang-mai, of the Boom, Gloom & Doom periodical, think of  India’s prospects? Faber thinks they’re of the very best, as long as Modi bulldozes through, and keeps the reform and development momentum going. Coming from Faber, this is an expectation, and not faint praise!

What does Chris Wood of CLSA and the Greed and Fear Report think? He feels all is well after the budget, but regrets the continuance of MNREGA, as well he might.

Wood has been strongly bullish on India ever since Modi started emerging from the scrum that wanted to be Prime Minister in 2014. He can be likened to a highly articulate version of domestic big bull Rakesh Jhunjhunwala, but hailing from of the highly influential international investing set. 

Wood says India is ‘remarkably immune’ to a Fed hike, and has less enthusiastic things to say about China, going forward.  Still, the market did take a tumble of over 600 points on Monday, the 9^th of March, when the rupee fell to almost 63 to the dollar against a strengthening greenback, and rumours of an impending interest increase in America.

Impending, it probably is not. Besides, the Federal Reserve Bank of America is expected to raise just 0.25% from zero, and that too by the end of 2015.Christopher Wood, no doubt, can see his way beyond the initial wobbles.

And what says Marc Mobius, the Yul Brynner look-alike boss of the Franklin Templeton Group? He has always bet big on India in the Asian ‘basket’, and intends to continue doing so.

And the Mutual Fund subscriptions from domestic investors, probably on a monkey-see-monkey-do basis, is pouring into Equity (Rs. 56,000 crores in the first 10 months of this fiscal) and Debt ( Rs. 33,000 crores in January 2015 alone, hoping for several rate cuts), too. Totals are higher than ever before. Besides, both the internationals and domestic institutional players are sure that India is in for a multi-year bull market.

The Sensex is headed towards 35,000 by December 2015, with Nifty above 10,000. And most observers, including Raghuram Rajan of the RBI, presiding over our interest rate mechanisms, seem optimistic. Rajan has cut the interest rate by 0.5 % so far, and seems poised to cut another half per cent in 2015, bringing the repo rate down to 7%. It needs to be at 3%, but that will take time.

While the Indian breast-beaters are in full cry for everything from the price of electricity to tears in our pluralistic fabric, the world sees India as a great opportunity, some saying it is the best bet in a troubled world.

They seem impressed by our renewed emphasis on infrastructure development,  manufacturing, modernising agriculture and related services, the intended rationalising of indirect taxes via GST. And none too bothered by our communal sparring, or bestial reputation as the ‘rape capital’ of the world.

India is changing certainly, its brand equity in flux, but much of the domestic media and intellectual narrative is stuck in the Nehruvian past. It is a nostalgic rose-tinted view that conveniently ignores that at least a third of our people live in abject poverty, due, not a little, to the failure of most of our economic policies since independence.  

In fact, a 2012 Credit Suisse Research Institute’s Global Wealth Report  puts it in sharp focus. It expects India’s dollar millionaires to be some 242,000 in number by 2017. But it also says 95% of Indians have less than $10,000. Only 0.3% of Indians have more than $100,000. And remember, our rupee currency is constantly depreciating.

Still, we do have 237,000 of the richest 1% of people in the world. Of these 1,500 Indians have more than $50 million, and 700 have more than $100 million. But this tiny number is out of more than 1.3 billion people!

So it must be a strange thing, similar to the Stockholm Syndrome, that causes this caterwauling for our socialist past.  But, shake off this rear-viewing delusion we must. And forge ahead, to a prosperity waiting for us with double digit growth, millions of new jobs and decent infrastructure.  

It is this, and its resultant possibilities for the many, as opposed to the few alone, that will truly uplift this nation. And not our perennial arguing and name-calling, that make things seem worse than they are.

For: Swarajyamag.com

(1,352 words)

March 10^th, 2015

Gautam Mukherjee