Wednesday, August 27, 2014

Former tea seller's son, Modi is "proximate" to influential, wealthy and business groups: Forbes commentary

By Our Representative
A top commentary, appearing a journal run by an influential US media business group has sharply criticized Prime Minister Narendra Modi, saying that despite his “oft-repeated campaign mantras about the tea-seller’s son”, he is “proximate to the influential, wealthy and business groups”. Elucidating, the commentary, written by Satyajit Das, a former banker and author of 'Extreme Money and Traders Guns & Money", says, the BJP under Modi "spent an estimated $500-700 million on its election campaign, presumably financed by its supporters in expectation of favourable policy decisions.”
The commentary, which appears in the Forbes India magazine (September 5, 2014), says, “Modi has promised changes without quite elaborating on how he will go about achieving them.” And the reason for this is simple: He does not which way to go at a time when business interests want him to pull in different directions. “On important issues, business interests have significant difference of views that will complicate policy-making”, the journal points out.
Elucidating, the commentary, titled  "Messiah Modi's Unclear Vision" says, “In manufacturing, some believe India has no future and should not seek to compete. Others favour high-value added, advance technology manufacturing. Another group favours labour-intensive low-tech industries, such as clothing, leather and food processing. All groups agree, however, that the government should subsidise their preferred strategy.”
Worse, Forbes says, business interests that support Modi are “rarely interested in long-term structural reforms”. They merely favour “stock market-driven artificial wealth, based on preferential access to government contracts, fast-tracking of approval for their projects, access to national resources like land, commodities and spectrum at favourable prices and access to capital, from state-controlled domestic banks.”
What further complicates matters is, “India’s parliament remains, as ever, the province of dynastic politicians, celebrities, rich and alleged criminals. In this election, 17 percent of assessed candidates faced criminal charges, including for rape or murder”, Forbes says, adding, the BJP will have to “deal with internal tensions that surfaced during the poll campaign, dividing the spoils of victory internally and amongst its supporters. It will have to reward its business backers instrumental in BJP’s success.”
Particularly pointing out how the Modi campaign on an anti-corruption platform, which played well to an electorate tired of scandals, may have worked then, Forbes suggests that things have begun to change, and Modi’s “desire for accountability and transparency did not extend to detailing contributions to the BJP’s coffers. It did not follow the example of the Aam Aadmi Party (AAP), which discloses every donation received on its website.”
Particularly taking strong exception to the the appointment of Modi's close aide Amit Shah as BJP president, Forbes qualifies this as an effort to "strengthen control over the BJP and government." It reminds the readers, “Shah is awaiting trial on charges of extortion and conspiring to carry out extra-judicial killings in Gujarat. He also oversaw the PM’s legal defence when they were charged in the 2002 Hindu-Muslim riots in Gujarat. The actions are arguably inconsistent with Modi’s desire to fight corruption and ensure clean governance and transparency.”
Especially arguing against what he calls “foreign faith” in Modi’s “ability to reinvigorate infrastructure investment”, Forbes says, it “misses the point that matters like land acquisition are the responsibility of the states.” It quotes an analysis by JP Morgan of the 50 largest stalled projects, which found that “55 percent were being delayed due to state issues and another 25 percent due to problems of access to raw material, controlled by government-owned, but independent entities such as Coal India Limited.”
Forbes says, “Investors have forgotten that Modi’s less charismatic and less controversial predecessor Manmohan Singh was once hailed as India’s saviour. He was the “architect of modern India” and drove important changes that paved the way for strong economic growth. By the 2014 election, Singh was seen as indecisive, weak and a puppet for interests of the Congress party.”
Forbes warns, “Modi’s Hindu nationalist philosophy and alleged complicity in the Gujarat riots may prove divisive. Only around 10 percent of India’s substantial Muslims voted for the BJP. During the campaign, leaders of one radical Hindu organisation affiliated with the BJP argued that Indian Muslims should not be allowed to buy properties in Hindu areas. Modi disapproved of the statement. However, in Gujarat, there is strong evidence of Muslim marginalisation.”
Pointing out that recent Union budget by Finance Minister Arun Jaitley “highlighted constraints”, Forbes says, “There were vague proposals about increasing foreign investment in defence and insurance, reduction of an ineffective subsidy regime, and tax simplification. The government’s approach appears curious. It reverted to relying on hoary old chestnuts—higher excise duties on cigarettes, cigars, betel leaves, tobacco products and soft drinks—to raise revenue.”

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