Issue :   
November 2018 Edition of Power Politics is updated.         November 2018 Edition of Power Politics is updated.
Issue:November' 2018

$ TRILLION ECONOMY

Modi-speak : How real ?

K R Sudhaman

Arun Shourie Arun Shourie is no friend of Modi Sarkar. Along with the “Mr. Honest”, Yashwant Sinha, he is on a self-anointed mission to run down the government led by his own BJP. Whatever prompted him to do so, he deserves a hearing. The Modi government is run by two and a half persons – that is Modi himself, his Sancho Panza, Amit Shah and the inhouse lawyer- blogger, Arun Jaitley, he says.How did he achieve the equation? He has not shared the secret of the formula but offered an interesting insight. Amit Shah reportedly calls meeting of cabinet ministers and gives them specific tasks, and if they dare to speak of the need for approval of the Prime Minister or the Cabinet, he advises: “You get on with the business and I will handle the rest”.

Amit Shah, Modi and Arun Jaitley Lyuten’s Delhi is full of many such stories. Whether these are apocryphal or real is difficult to say but many appear to take the Shourie-speak seriously. That is because of the trust deficit this government has come to suffer from. Also because of what has been acknowledged as the over centralization of power in a set up that has come to be dubbed as an event management enterprise because of its penchant for spectacular announcements with no matching performance indicators.

This in short is the Modi problem as the countdown for his second tryst with the Lok Sabha ballot has begun. In my view, it will be patently unfair to go along with Shourieism and dub Modi as a failure. You cannot call him a success story either. His greatest undoing was his own tall promises. Delivery or perception of delivering is essential in a vast country like India. On this score too Modi has disappointed his acolytes. His pledge of “Minimum Government and Maximum Governance” has gone for a toss.

A scrutiny of the PM's statements over the past 12 weeks lays bare a stunning lack of homework for policies that affect each one of the 1.34 billion people of India.Modi has the habit of setting up overambitious targets on the economy without understanding its dynamics.
First he said India would get back to double-digit growth very soon and then he went on to say India would become $5 trillion economy by 2022. He also promised to double farmers’ income by 2022. He appears set to push these goal posts now with the domestic and global economic situation in bad shape.
Yes, India has regained the tag of being fastest growing economy under Modi stewardship. Perhaps India is one of the sweet spots in the world for investments. It is no comfort. Because the vulnerability of the economy has become pronounced after the demonetization and “hasty” rollout of GST. Dollars upward swing, USChina trade war, Iran sanctions and crude oil price surge have made matters worse for the Indian scrip.
Modi may not be personally corrupt but he has certainly underperformed in the drive to check corruption, unearth black money and to bring to book the likes of Vijay Mallaya, Lalit Modi and Nirav Modi, who have literally taken the Indian banking sector for a ride.
His failure on the job front is no less pathetic. It is largely due to the death knell his policies have sounded to the MSME sector- the largest employer in the countryside – some 80 per cent jobs according to an estimate.
What is more saddening is the fact that virtually every scheme like cash benefit transfers, digital payments, and even the much maligned Aadhar currently run by Modi government was either conceived or begun by the previous regimes.

Yes, India has regained the tag of being fastest growing economy under Modi stewardship. Perhaps India is one of the sweet spots in the world for investments. It is no comfort. Because the vulnerability of the economy has become pronounced after the demonetization and “hasty” rollout of GST. Dollars upward swing, USChina trade war, Iran sanctions and crude oil price surge have made matters worse for the Indian scrip.

Palaniappan Chidambaram India has had good monsoon for three consecutive years. It resulted in glut in farm production but remunerative prices are still a mirage to the farmers. Well, Modi sarkar has hiked the MSP in recent weeks. It is not a step that benefits small and marginal farmers. Higher MSP benefits only rich farmers as they have capacity to hold stocks for a longer period, especially perishables.
Luck favoured the Modi tide over the past four years. It appears to have gone on casual leave on the eve of an electoral semi-final in the Hindi belt. My reference was to the massive drop in crude oil prices which led to drop in current account deficit, and decreased government’s subsidy bill. The government is scrambling today for cover with bouncers coming its way from consumers hit by high petrol- diesel prices, farmers’ unrest and the prospects of CAD swelling. Palaniappan Chidambaram, whose dream budgets are a part of our economic folklore, has interesting take on Modi economy. “Tyres of three of the four wheels on which the economy rides are punctured. Firstly, exports, secondly private investment and thirdly gross fixed capital formation. The only tyre that is ok is public expenditure.
Even that may falter if government tries to compress public expenditure to meet fiscal deficit target of 3.3 per cent. Also because of likely slippages in achieving GST and disinvestment targets…” India had grown over 10 per cent in market prices and a little over 9 per cent at factor cost for four consecutive years from 2004-08; it could not sustain this due to poor infrastructure and lack of skill development leading to overheating of the economy. Since the global economic situation is rapidly worsening, experts are pegging the growth rate below 7 per cent for this fiscal. Put simply, Modi will seek a renewed mandate just when slowdown has hit the economy.
Says Crisil chief economist D.K Joshi: “Our forecasts do not support double-digit growth.” According to him, such a miracle can happen in an odd year but certainly not on a sustained basis. He is, however, optimistic that on a continuous basis, India can grow at 7.5-8 per cent because of the structural reforms carried out by the Modi government.

D.K Joshi A CII survey of about 200 companies in early October also presents a dismal picture. A majority of respondents felt that GDP growth will be in the 6.5 to 7.5 per cent range in 2018-19. The CII’s business confidence index report for July- September 2018 forecasts GDP growth to be between 6.5 and 7 per cent.
Cut to oft-repeated assertions of Prime Minister Modi on $5 trillion economy by 2025. For this feat, India will have to grow over 10 per

Cut to oft-repeated assertions of Prime Minister Modi on$5 trillion economy by 2025. For this feat, India will have to grow over 10 per cent, in fact, 10.6 per cent to be precise, which, according to NIPFP economist N R Bhanumurthy, is certainly over ambitious if not impossible.To achieve Modi goal, India will have to grow by at least 14.2 per cent annually in the next 4- 5 years; no country has had such a luck so far, even the Dragon for that matter. Its best show was 12 per cent for some years. With recession hovering around the global horizon, even the 7.4 per cent growth rate (RBI forecast) for this fiscal, looks difficult.

N R Bhanumurthy cent, in fact, 10.6 per cent to be precise, which, according to NIPFP economist N R Bhanumurthy, is certainly overambitious if not impossible.To achieve Modi goal, India will have to grow by at least 14.2 per cent annually in the next 4- 5 years; no country has had such a luck so far, even the Dragon for that matter. Its best show was 12 per cent for some years. With recession hovering around the global horizon, even the 7.4 per cent growth rate (RBI forecast) for this fiscal, looks difficult.
When India registered over 9 per cent under the UPA regime, global growth was around 5 per cent. At present, global growth has slumped to around 3 per cent. It may see more slowing down after a year or cent, in fact, 10.6 per cent to be precise, which, according to NIPFP economist N R Bhanumurthy, is certainly overambitious if not impossible.To achieve Modi goal, India will have to grow by at least 14.2 per cent annually in the next 4- 5 years; no country has had such a luck so far, even the Dragon for that matter. Its best show was 12 per cent for some years. With recession hovering around the global horizon, even the 7.4 per cent growth rate (RBI forecast) for this fiscal, looks difficult.
When India registered over 9 per cent under the UPA regime, global growth was around 5 per cent. At present, global growth has slumped to around 3 per cent. It may see more slowing down after a year or

(K R Sudhaman, a senior journalist, who has been Editor of Press Trust of India, Economics Editor, Financial Chronicle and TickerNews)