Modi has to redraft his economic vision

By Shivaji Sarkar

May 27, 2019
New Delhi: The BJP, rather Narendra Modi, has stunned the world. Resounding victory touching 352 plus is a rare feat in an election. The spread is all the more spectacular as the fortress West Bengal has collapsed. The victory is all the more surprising when seen in the backdrop of the economy not being in good shape. The credit goes to marvellous poll management.

Yes, Modi stressed on the populist measures that touched the poor — Pradhan Matri housing, Ayushman health care, toilets in every house, job ruses of MUDRA or Skill India and about 431 other programmes. In the post-election scenario, these programmes look to have touched the hearts of millions. May be, as part of their gratitude, they voted Modi back to power with a thumping majority.

That may possibly explain a uniform phenomenon of the rout of caste-based parties such as of Mayawati’s BSP, with the support base among dalits; Ajit Singh’s RLD based on Jat support; Mulayam-Akhilesh’s SP a hardcore Yadav-OBC party; Chandrababu Naidu’s TDP, a party of OBC and fringe castes but with a slightly wider base; Sharad Pawar’s NCP, strong Maratha sugar-lobby party or Laloo Yadav’s RLD, a Yadav party.

The economic packages lured the voters to vote for Modi, who sells dreams to the fringe classes, rather than the combine put together. This is possibly Modi’s new political economy. It does not serve the elite voters, who certainly no political party can trust for loyalty. A best instance is that of Modi’s one time Chief Economic Advisor Arvind Subramaniam. Modi could trust him but Subramaniam could not understand Modi and chose a different path.

Modi’s macro economy functioned differently from his targeted-vote economy. Dole-based economy succeeded politically to break the caste arithmetic, a shrewd move indeed. But so far his macro economy has been a continuation of the hardcore Manmohan Singh’s principles called Manmohanomics. So Modi had to bear the brunt of criticism that had seen the ouster of Manmohan Singh.

This no doubt had put a spanner in the progress of the nation, and which led to joblessness, industrial slowdown, lack of demand, high bank NPAs, crisis in public sector like giants BSNL/MTNL, ONGC, petro companies and Maha Navaratnas.

But that was before the elections. What next? Would he now have a new policy? Modi did not promise much in concrete terms. But if he and his government continue the same policy, the nation would continue to go downhill, which would neither suit him nor the country.

It is not the public sector alone that faced the brunt. Hindustan Lever, the largest consumer goods producer, had the poorest show in 18 months in March 2019 of 7 per cent. And what was unnerving was its CEO Sanjiv Mehta’s statement: “Consumer essentials are recession resistant but not recession-proof”.

From car makers to toothpaste sellers and in fact every sector has had a lousy start this year. All eyes are now fixed on Modi’s new policies. Would he be breaking away from Manmohanomics to pave a super highway of growth or would his team continue to struggle in search for a policy.

India has to come out of this recession else the aspirational voters might behave in the most frustrated manner. During the past two years farmers’ distress has increased and they have had to march several times either to the country’s capital Delhi or the financial capital Mumbai. Mostly peaceful, but with extreme angst!

The new government is literally walking on the razor’s edge. The BJP’s popular Hindutva promises wonderful life as did the Marxism in Soviet Union. An aspirational voter believes in it because he feels he would have more than what he can actually see.

However, the BJP faces its toughest challenge now. Mere booth management does not win polls, and this it realised in the three State polls held last December. A correction today has paid seat dividends no doubt, but now the young voters want better industrial show, action and result that would ameliorate their lot.

Modi and team must accept that 2019 is an aspirational vote, a process of social synthesis. And the caste divide in Indian social system has been obliterated by a strong Modi. Poorer people, having got the basics of food, cash support, house and toilet, would be demanding more.

India is entering the middle income category of countries around $2,000 per capita income. Newly-emerging consuming classes are driven by aspiration rather than feudal style dole outs. Even less-demanding rural youth vie with the urban youth.

Economy needs a boost. The last five years have seen a benign environment where food prices recorded a modest increase. Now a global economic slowdown is visible. There are incipient signs of stress on the price front while global trade wars, may be even real wars, are breaking out. Brexit may change European economy and those dependent on it.

Modi has also to work in education, its funding and linking it to industry and manufacturing. He also has to work on a new short-duration syllabus that saves nation’s money and churns out skilled people faster. Public universities are in crisis and private ones in a morass. The youth is unhappy. The system needs cash and policy lubrication.

The tax system needs reform as the one-nation GST has hit many sectors such as education, NGOs, small traders and entrepreneurs. Income tax reduction is awaited. It is a tough task as people’s purchasing power has to be increased as also the government’s revenue. The stock market is in a thaw. Occasional boom is stated to be self-managed.

The economic vision has to be redrafted. The NITI Aayog has to be invigorated. It has to find out solutions to inflation, slowdown and joblessness. The Aayog has to function as a think tank but is unable to even suggest ways to come out of flip-flop policies on taxing fuel or high tolls or cost on working out tax component. Over 5 per cent of corporate expenses are on working out the taxes and satisfying tax raiders.

The nation and its people have reposed trust. They want to be paid back and cannot wait for another term to deliver. Till today, Indira Gandhi is ridiculed for the failure of her garibi hatao slogan. A lion of a Modi cannot repeat that. It would devastate the people. He has to function to invigorate the faith in leadership.

The aspirations today are more than what these were 2014. Indians believe Modi has the magic wand to solve the problems and make India the leading economy. And hope next five years would finally see ‘India shining’.—INFA