Monday, April 07, 2014

Modi to "adopt" Thatcherite agenda, will rollback UPA's welfare schemes, privatise public sector cos

By Our Representative
With analysts predicting that Narendra Modi will become the next Prime Minister of India in the Lok Sabha polls, economists close to him have begun to declare that he is sure to bring an end to the welfare programmes initiated by the UPA government. Bibek Debroy, a prominent Indian economist, has been quoted as saying that “the Hindu nationalist leader shared his market-driven policy platform and opposed handouts.” He adds, "It is essentially a belief that people don't need doles, and don't need subsidies". Instead, Modi would focus on “building infrastructure to ease poverty”.
In an article released by the world's most prominent Reuters news agency, titled “Advisers to India's Modi dream of a Thatcherite revolution”, authors Frank Jack Daniel and Rajesh Kumar Singh recall, “When Indian opposition leader Narendra Modi gave a speech on the virtues of smaller government and privatization on April 8 last year, supporters called him an ideological heir to former British Prime Minister Margaret Thatcher, who died that day.”
To prove its point, Reuters quotes Deepak Kanth, a London-based banker collecting funds for Modi, as saying, "If you define Thatcherism as less government, free enterprise, then there is no difference between Modi-nomics and Thatcherism." It adds, “Kanth, who says he is on the economic right, is one of several hundred volunteers with a similar philosophy working for Modi in campaign war-rooms across the country. Among them are alumni of Goldman Sachs and JP Morgan trading floors”.
"What Thatcher did with financial market reforms, you can expect a similar thing with infrastructure in India under Modi," Kanth predicts, referring to Thatcher's trademark "Big Bang" of sudden financial deregulation in 1986. Reuters adds, “Modi's inner circle also includes prominent economists and industrialists who share a desire to see his BJP draw a line under India's socialist past, cut welfare and reduce the role of government in business.
Already, Reuters has witnessed, the mere the possibility that “India may move to the right has brought free-market champions flocking home from high-flying careers abroad to join Modi's campaign.” Two advisers involved in policy discussions within the BJP's top leadership have been quoted as saying that there might be “partial or total privatizations of Air India and other failing public sector enterprises.”
However, according to the Reuters, “Mammoth Coal India, the source of much of the country's electricity generation, is not seen as an easy privatization target. Possible opposition by allies in government and India's strong labour laws mean that some of these policies will take time. Debroy as been quoted as commenting, "If you say is it going to happen in 2014-15, is the finance minister going to stand up and announce privatization, I'm inclined to think no, but will it figure eventually? The answer is yes."
Reuters says, “The battle of ideas between Modi and the ruling Congress party was mirrored in a public spat between two well-known economists of Indian origin, Nobel laureate Amartya Sen and Columbia University's Jagdish Bhagwati. Sen's belief that public spending on food subsidies and health was needed to end poverty was adopted by Gandhi. The result was a proliferation of welfare schemes, most notably a rural work programme and a giant subsidized food plan.”
  • Panagariya next Modi advisor
It adds, “Modi's economic thinking is closer to Bhagwati, who strongly advocates poverty reduction through deregulation-led growth. Bhagwati's colleague and writing partner, Arvind Panagariya, a former chief economist at the Asian Development Bank, is tipped by some in the BJP for a role in any Modi government.” Panagariya believes “the jobs it created - such as maintaining irrigation ponds and village roads - were unproductive.”

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