His task is to rev up spluttering economic engine through reforms and incentives.
Belatedly, the message seems to be sinking. The economy is on sick-bed. All relevant indices confirm the downturn. Surprisingly, even government funding for major infrastructure projects is getting scarce. The budget was a huge disappointment, dampening the corporate mood and spreading gloom in the stock markets.
However, the good news is that the Prime Minister has taken upon himself to try and arrest the economic slide. He was ill-advised to give the nod to some of the more controversial features of the budget. Criminalizing default in corporate social responsibility was a bad idea. We learn it is being junked.
Greater mischief was done by the steep hike in corporate tax in the top bracket. When the promise was to bring corporate taxes to the level of those prevailing in the East Asian economies, that is between 15% to 25% range, pushing it to 42.5% was indefensible. This would only encourage evasion and depress fresh investment.
The Prime Minister, now fully alive to the multiple signals of a looming recession due to a combination of domestic and global factors, did something courageous on 15 August. From the ramparts of the Red Fort, he paid the captains of business and industry a fulsome compliment, saying that they are wealth creators and perform a national service.
Don’t recall any other Prime Minister having had the courage to so openly acknowledge the role business and industry plays in the task of nation-building. In the heyday of socialism, it was normal for Congressmen to abuse “Birla and Tata” in public and in the quiet of night accept cash handouts. The bribe-givers did not mind, aware that it was an integral part the political business. The licence-quota-permit raj created billionaires thanks to the largesse corrupt ministers bestowed on their benefactors. A mere piece of paper allocating a few acres of precious land was enough to turn paupers into millionaires overnight. Yesterdays’ billionaires owe it all to the Congress’ version of Samajwad.
But let us return to Modi’s ringing endorsement of big business: Wealth creation is a great national service. Let us not see wealth creators with suspicion. Only when wealth is created, wealth will be distributed. Wealth creation is absolutely essential. Those who create wealth are India’s wealth, and we respect them. Pay heed, the Prime Minister of India is saying that the wealth-creators are India’s wealth. Corporate chests might have bloated several inches on receiving this ringing endorsement. Hitherto politicians treated businessmen no better than harlots, good for tryst only in the dark.
No, we are not exaggerating. Till very recently it was considered a kiss of death for politicians if they were seen in the company of businessmen. Post-liberalisation, the public mood has changed. Businessmen are now job creators. No government can meet the ever growing demand for jobs. Private sector needs to create opportunities for the million-plus who join the job market every year. How Rahul Gandhi—he of the suit-boot ki sarkar fame—might react to Modi’s acknowledgement of the key role of the corporate sector, can be fully discounted. For, the tired and retired Congress president is a case of damaged goods now. Politicians who have been bed with moneybags all their lives, are particularly prone to abuse them in public. Unsurprisingly, their corporate friends disregard the gratuitous abuse as a necessary hazard of the political business.
However, taking the stigma out of the public discourse on the business class is not enough. Modi needs to set a level playing-field for the corporate world, without favour to any particular business house, so that its enormous contribution to economic growth can gain traction. Creating conducive conditions for fresh investment would require major policy tweaks. With demand slowing down in sector after sector, and the series of rate-cuts by the RBI failing to spur growth, the government will have to step up its own infrastructure spending. Unfortunately, in the last quarter that spending too has sharply reduced. It could be due to the higher bill for various freebies and the ever rising off-budget expenditures, which in fact bolsters the fisc far in excess of what is claimed officially.
Under the open economy, a level playing field allows businesses to grow on the strength of their ideas and intellectual and financial heft—and certainly not through a corrupt nexus with ruling politicians. India should have its own Bill Gates and Mark Zuckerbergs. Thus far, no Indian billionaire, aside from the internet-linked new age professionals, can claim not to have exploited the bribes-for-favours route for getting enormously wealthy. Modi has done well to accord big business its rightful place in nation-building. The challenge for the corporate world is to measure up to that accolade. We need a strong and vibrant corporate sector which plays by the rules, and does not insist on tailor-made policies for favouring one corporate house to undermine its rivals.
Specific steps to rev up the engine are still under consideration. These will have to incentivise key sectors of the economy to put a bottom on the falling demand. Also, bankers fear harassment for credit disbursal even on purely a priori basis. This fear of the CBI, ED, etc., needs to be allayed. Above all, if Modi can undertake one of the biggest challenges and scrap Article 370, it should not be hard for him to revisit Jairam Ramesh’s industry-and-growth killing land acquisition law to align with the real economic conditions in the country. Also, labour flexibility cannot wait any longer. Obligatory noises by organised labour need not deter Modi from doing the right thing by the vast working class, which will gain, and certainly not lose, from a level playing field between the employer and the employed. Right now the scales are fully tilted in favour of the employed, a vital reason for the lack growth in formal employment in the private sector.
In sum, Modi has mastered how to remain on top of politics. Gaining mastery over the economy is a bigger challenge. But once done, it will complement his success in politics. A little bird tells us that in matters of economy, Modi can do with some outside expert advice. Get ranking economists on board—and ensure they are not inclined to leave finding the bosses unreceptive.
SHOBHAA DE IS RIGHT, AND WRONG
We agree with Shobhaa De. The celebrated columnist-commentator par excellence rubbished former Pakistan High Commissioner Abdul Basit’s claim that he influenced her to write in favour of self-determination for Kashmiris. Basit made that claim in an interview on a social media platform sometime ago. His exact words were: “It was challenging to convince any Indian journalist to write favourably on Kashmir until I met Shobhaa De.”
On being told, De completely denied it, saying she hardly met Basit for a few moments and that too in the presence of a couple of others at the Jaipur Literary Festival. There was no occasion to talk Kashmir. We believe her.
You see, De called for plebiscite in Kashmir fully of her own volition. Nobody asked her to do so. The impugned sentence in her column read: “Now the time has come to resolve the (Kashmir) issue once for all through a plebiscite.”
Meanwhile, no significance need be attached to the fact that a number of commentators on various Pakistani TV channels, while spewing venom against Modi, approvingly refer to a select few Indian politicians, journalists and others whom they enlist on their side of the Kashmir dispute.
And, then, they want us to believe Modi has clamped down on the right to free speech!